The government is unlikely to introduce a Bill in the ongoing Budget session of Parliament to facilitate the privatisation of two public-sector banks (PSBs), official sources told FE.
The Niti Aayog has reportedly suggested that Indian Overseas Bank and Central Bank of India be privatised. But a key panel that is to endorse the names is yet to take a final call. The Cabinet, too, has to ratify the draft Bill before it is introduced in Parliament. The Budget session will continue until April 8.
The Banking Laws (Amendment) Bill, 2021, was listed as part of the legislative business for the winter session of Parliament that concluded on December 23, 2021. However, the government deferred the bold plan amid fierce protests by bank unions.
Speculations about the government reviving the proposal gained traction after the recently-concluded assembly polls in key states, including Uttar Pradesh. In fact, the All India Central Bank Employees’ Federation general-secretary BS Rambabu recently said staff of all PSBs would go on strike on March 28 and 29 if the government failed to withdraw the privatisation proposal.
The draft Bill may suggest that the requirement of minimum government holding in PSBs be trimmed to 26% from 51%. The government may also be open to giving up its entire stake in select banks subsequently to garner investors’ interests.
The Bill proposes to “effect amendments in Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980 and incidental amendments to Banking Regulation Act, 1949…”, according to the list of legislative business for the last winter session of Parliament.
Presenting the Budget for 2021-22, finance minister Nirmala Sitharaman had announced the privatisation of two PSBs and one general insurer, as part of the Centre’s bid to rake in Rs 1.75 lakh crore in disinvestment receipts. Neither has taken off so far.
The government has also trimmed its disinvestment proceeds to just Rs 78,000 crore in the revised estimate for the current fiscal. Even this reduced target is set to be missed, as the initial public offering of state-run LIC will likely be pushed to the next fiscal due to the market turmoil in the aftermath of the Russia-Ukraine conflict.