The names of the public sector banks (PSB’s) which will be privatised have been shortlisted by a panel headed by the Union Cabinet Secretary, according to a news report by CNBC-TV18. The two banks which are likely to go through the process of divestment are the Indian Overseas Bank(IOB) and the Central Bank of India (CBI), sources told CNBC-TV18.
On June 22, the share prices of Indian Overseas Bank and the Central Bank of India had rallied by 18% and 16% respectively to reach a 52 week high. The speculations of the two banks getting divested excited the investors leading to a sudden surge.
For the divestment process to move forward, amendments will be required to the Banking Regulations Act among some other banking laws. It is reported that the Ministry of Finance headed by FM Nirmala Sitharaman is working towards making the requisite legislative changes.
According to news agency PTI, the panel had discussed the recommendations of the NITI Aayog regarding divestment of PSB’s on June 24.
The privatization of several public sector undertakings (PSU’s) has been a priority for the Modi government. In the budget for FY 2021-22, the government announced a plan to monetize 100 PSU’s collectively valued at Rs.2.5 lakh crore. It has also set a target to raise an amount of Rs.1.75 lakh crore through disinvestment during the current fiscal year.
As of 1:35 PM on Monday, the share prices of CBI and IOB stood at Rs.26.30 (up by 6.26%) and Rs.26.35 (up by 6.25%) respectively on the National Stock Exchange(NSE).