The finance ministry speed ups all the procedures related to the stake sale of Four state-owned banks such as IDBI Bank, Bank of Maharashtra, Punjab and Sind Bank, and UCO bank. The government is planning to complete all the disinvestment processes of the current fiscal by march. Last day a meeting was held by the finance minister and all the secretaries of the ministry and discussed the proceedings.
The privatization process has started and is expected to complete by March 2021. The government is looking to reduce the number of public sector companies at a time the finances have taken a hit from significant shortfalls in tax revenue because of the COVID-19 pandemic. In the wake of amid coronavirus pandemic, the central government announced a stimulus package in May under Aatmanirbahar Bharat and promised a new public sector enterprise policy that would define the strategic sectors. According to this, there would no more than 4 public sector players would be allowed in the banking sector. The rest of the companies being privatized, merged, or brought under holding companies.
The Finance ministry was being prepared for the proposal on the strategic sector and would be taken into cabinet soon for approval. The government currently has a 47% stake in IDBI bank and last year state-run insurance company LIC acquired 51% of its stake and infused around 21,624 crores into it. Anyway, the official said that the government will go ahead with the decision of the proposed stake sale in IDBI Bank.
India is looking to reduce the number of government-owned lenders to just four as part of an overhaul of the banking industry. However, the stake sale in these lenders will not be easy because these banks are already burdened with a better proportion of bad loans and should spill into the next fiscal year as well. Government officials, involved in the stake sale push, said more consultations would be held before the process proceeds. The government of India is keen to push reforms amid the pandemic. Some officials have recommended to the government is that before the privatization some sort of restructuring is needed to cut down the losses of public sector banks.
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