For the first phase of privatization, government may zero in on at least two public sector banks (PSBs).
Even in order final the names of potential candidates for privatisation, a meeting will be held between senior officials of the Niti Aayog, the Reserve Bank of India (RBI), and the finance ministry’s financial services and economic affairs departments on April 14 (Wednesday).
A Meeting To Discuss The Names Suggested By Niti Aayog
A source said that according to Niti Aayog, Four to five PSBs have been suggested as potential candidates which will be discussed in the meeting and the names could include Bank of Maharashtra and Indian Overseas Bank. According to the sources state-owned general insurance companies, apart from banks, may also be taken up for discussion.
The think tank Niti Aayog has in the last month itself submitted its list of about 12 public sector undertakings (PSUs) to be privatised in the first phase. Now, there will be meeting for discussion, which is the first of its kind meeting after the government kicked off the privatisation drive.
The final names shall be considered and finalized and then sent by the departments concerned of the finance ministry to the Core Group of Secretaries on Divestment (CGD), headed by the cabinet secretary.
The think tank has submitted a report on various public sector banks after evaluating their financials, debt and other issue and on the same basis, shortlisted them. Some of the banks are currently under the RBI’s prompt corrective action framework and after the government pumps in some liquidity in them, they can be considered for either privatisation or merger once out of liquidity crunch.
Sources also revealed that the government depending on the regions and states, shall select and keep four to five banks under its control and the rest of them shall be privatised in a phased manner.
Government’s Plan To “Monetise & Modernize”
In a recent pitch for privatisation in which Prime Minister Narendra Modi stated that his government has no business to be in business and their mantra going forward would be to “monetise and modernise”. The process has gained momentum after this clarification and the approach adopted by Niti Aayog is in sync with the government’s new strategies on privatisation and asset monetisation.
Along with the timelines of privatisation, sources said the report submitted by Niti Aayog shall entail a plan for majority/outright sale, strategic deals, monetising assets, or even share buybacks. The whole plan is made keeping in mind the disinvestment target which is pegged at Rs 1.75 trillion for next fiscal year.
Privatisation of two public sector banks and one general insurance company was announced by Finance Minister Nirmala Sitharaman in her budget speech.
Niti Aayog, under the new Public Sector Enterprise policy for Aatmanirbhar Bharat, has been mandated to recommend the names of PSUs in strategic sectors to be privatised, merged, or made subsidiaries of other PSUs.
Strategic sectors atomic energy, space, defence, transport, telecommunications, power, petroleum, coal, banking, insurance, and financial services are the sectors in which the government intends to keep a “bare minimum” presence.