Govt set to privatise more than half of 12 remaining public sector banks

A Reuters report on July 21, Tuesday, said the Narendra Modi-led BJP government was looking to privatise more than half of the 12 public sector banks (PSBs) to reduce the number of PSBs to just five as part of an overhaul of the banking indu quoted government and banking sources. The plan would be soon put in front of the Union Cabinet for approval, the report added.

The report added that first, the Modi government would sell majority stakes in Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank.

"The idea is to have 4-5 government owned banks," Reuters quoted one senior government official.

Reuters said India’s Union Finance Ministry declined to comment on the matter.

The cash-strapped Modi government has been banking on privatisation of state-further mergers of banks as only five would remain operational. In 2019, the government had merged ten PSBs into four.

"Now we are thinking of selling the unmerged banks to private players," the government official told Reuters.

But Reuters pointed out that rising bad loans resulting into mounting NPAs and unfavourable market conditions caused by the COVID-19 pandemic might see action on this front deferred to next year.