New Delhi : The government has shortlisted four mid-sized state-run banks for privatisation, aimed at shoring up government revenues.
The four banks on the shortlist are Bank of Maharashtra, Bank of India, Indian Overseas Bank and the Central Bank of India, reports say.
Two of those banks will be selected for sale in the 2021/2022 financial year which begins in April. The government is considering mid-sized to small banks for its first round of privatisation to test the waters. In the coming years it could also look at some of the country’s bigger banks, the reports said.
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.
According to experts , India’s deepest economic contraction on record caused by the pandemic is driving the push for bolder reforms.
The governemnt also wants to overhaul the banking sector reeling under a heavy load of non-performing assets, which are likely to rise further once banks are allowed to categorise loans that soured during the pandemic as bad.
Bank of India has a workforce of about 50,000 and Central Bank of India has 33,000 staff, while Indian Overseas Bank employs 26,000 and Bank of Maharashtra has about 13,000 employees, according to estimates from bank unions.
Bank of Maharashtra’s smaller workforce could make it easier to privatise and therefore potentially one of the first to be sold, reports said.
On Monday workers started a two-day strike opposing the government’s move to privatise banks and sell stakes in insurance and other companies.
The government hopes that the Reserve Bank of India, the country’s banking regulator, will soon ease lending restrictions on Indian Overseas Bank after an improvement in the lender’s finances that could help its sale.