Central govt shortlists four public sector banks for privatisation

New Delhi: The government has shortlisted four mid-sized state-run banks for privatisation, under a new push to sell state assets and shore up government revenues, the government sources said.

The four banks that have been reportedly shortlisted are Bank of Maharashtra, Bank of India, Indian Overseas Banks and the Central Bank of India, the government officials said.

The government is considering mid-sized to small banks for its first round of privatisation. The government, however, will continue to hold a majority stake in India’s largest lender State Bank of India, which is seen as a ‘strategic bank’ for implementing initiatives such as expanding rural credit.

Finance Minister Nirmala Sitharaman in her budget speech had said that other than IDBI Bank, a proposal of privatisation of two public sector banks and one General Insurance company will be taken up in the year 2021-22.

The PMO in August 2020 had also written a letter to the Ministry of Finance to accelerate the process of privatisation. In order to raise funds and improve the financial health of the state-owned banks, the government aimed to keep stakes in only five PSU banks, and privatise the rest of them, Reuters had reported.

Earlier, in 2017, five associate banks and Bhartiya Mahila Bank were merged into State Bank of India; and in 2018, it was decided to merge Bank of Baroda with Vijaya Bank and Dena Bank.