In a major overhaul in the banking sector, the government is planning to privatise more than half of the state-owned banks, reported Reuters quoting sources.
The idea is to limit the number of state-owned lenders to just five by selling majority stakes in Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank, said the report.
As per the Reuters report, a senior government official said the plan is to have 4-5 government-owned banks instead of 12. The government is still formulating the privatisation proposal and it will be put before the cabinet for approval.
The finance ministry has not commented on the matter so far, as per the report.
The privatisation plan comes at a time when the economy is strapped due to the ongoing COVID-19 pandemic and the government is trying to raise money by selling assets in none-core companies and sectors.
According to the Reuters report, several government committees and the Reserve Bank of India (RBI) have recommended that India needs to limit its state-owned banks to five.
In 2019, the government had merged ten state-owned banks into four but the government official told Reuters, "The government has already said that there will be no more mergers (between state-owned banks) so the only option for them is to divest stakes."
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