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As a part of mega privatization initiative disclosed in the Union Budget in February, the Centre may propose to sell its stake in Central bank of India and Indian Overseas Bank (IOB). A few days back, the government think tank, NITI Aayog have submitted the names of the banks as recommendation for disinvestment.
As per reports in The Times of India, a source stated that the Bank of India may be a potential candidate for sale. The proposed names by the government think tank is being looked into by the disinvestment and financial services department, revealed the ministry sources. The exercise for finalizing entities that are to be taken up for privatization is a multiphase process.
Following the NITI Aayog’s responsibility of recommending the names, it will be reviewed by the inter-ministerial group of officers and then by group of ministers, before the Union Cabinet puts its seal of approval.
According to the sources, the department of investment and public asset management that manages the government’s asset sales programme, will examine the proposal with the department of financial services and discuss the legislative changes needed for the privatization of the state run bank. The source further added, “This timeline will depend on the legislative changes required.” The phenomenon will also be discussed with the RBI as the laws and regulations provide a special dispensation for state run entities in several areas.
Among several state run lenders, NITI Aayog had put its thoughts on the six entities which were not a part of the merger initiative a few years back. In addition to Bank of India, Indian Overseas Bank and Central Bank, it also included Bank of Maharashtra, Punjab and Sind Bank and UCO Bank.
In the view that the better off entities would achieve greater interest, Indian Overseas Bank and Central Bank are shortlisted. The present share price of both the entities are valued at Rs. 44,000 crore with IOB’s market cap estimated at Rs. 31,641 crore.