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New Delhi: The central government under the current dispensation has been proactive in privatising the public companies. Air India was privatised recently. A 3.5 per cent stake was sold in the Life Insurance Corporation of India (LIC). And now, reports have emerged that the government may introduce in the Parliament to allow selling a 100 per cent stake in the PSBs to private entities. According to a report by Economic Times, the government is likely to introduce an amendment to the Banking Companies Act, 1970, in the upcoming Monsoon session of the Parliament. The bill would allow them to completely exit the public banks. The dates of Monsoon Session 2022 have not been announced yet.
Currently, the government is required to retain at least a 51 per cent stake in the public banks. Earlier, the government was thinking of reducing the stake to 26 per cent. But if the bill is introduced, it may approve holding a 0 per cent stake in such banks. Recently, the talks around selling the stake in IDBI Bank have been making rounds in the echelons of the government. Central Bank of India and Indian Overseas Bank are also on the government’s radar.
In India, the Reserve Bank of India (RBI) is the regulator of the banking sector. The Finance Ministry is also reportedly in talks with the RBI to discuss the ownership issues of these banks.
In her Budget 2022 speech, Finance Minister Nirmala Sitharaman stated that the government will privatise 2 PSBs and 1 general insurer in the current year. The bill was earlier to be introduced in the Winter Session of the Parliament in 2021. It was named Banking Laws Amendment Bill, 2021. However, it was not introduced.
At present, the government holds a 45.48 per cent stake in IDBI Bank and a 49.24 per cent stake in the LIC.
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