Public policy think tank of the Government of India, NITI Aayog has submitted the names of two public sector banks (PSBs) and one public sector general insurer, which are likely to be a part of the privatization plan and soon be sold off under the government’s new privatisation policy, to the Core Group of Secretaries on Disinvestment.
According to the media reports, the Department of Investment and Public Asset Management (DIPAM), and the Department of Financial Services (DFS) will soon be examining the names suggested by NITI Aayog and zero down the list of financial institutions for privatisation this year.
As quoted in media reports, Bank of Maharashtra and Central Bank are likely to be the two candidates that has been shortlisted for privatization. Media reports are also quoting the Indian Overseas Bank will also be considered either this year or possibly later.
Sources, as quoted in media reports, suggests United India Insurance to be selected for privatisation among the three general insurers, due to relatively better solvency ratio. Centre had earlier hinted that the lenders under prompt corrective action (PCA) framework or weaker banks would be not be a part of the privatisation plan as it would be difficult to find buyers for them. This plan would have excluded three PSBs – Indian Overseas Bank, Central Bank and UCO Bank out of the government’s disinvestment plan.
But not they are also likely to be brought out of PCA as there are showing improvement in some of the key parameters such as profitability and asset quality (in net NPA terms as they have stepped up provisioning) in the last 3-4 quarters. This would include them in the privatization consideration.
Before the privatisation process, the centre ran the merger drive of the state-run banks, amalgamating weaker banks with the stronger and larger ones. So far 10 public sector banks were merged with effect from April 1, 2020.
With the merger coming into effect, India now has 12 public sector banks, down from 27 in 2017.