The Centre has shortlisted Central Bank of India (CBI) and Indian Overseas Bank (IOB) for divestment.The two state-run banks might see 51 percent sale in the first phase of disinvestment.
The government will amend the Banking Regulations Act, and some other banking laws for divestment, the news channel reported.
Following the news, shares of CBI and IOB surged 20 percent on June 21.
The weak financial metrics of lenders like CBI and IOB could lead to unexpected hurdles in the government's plan to privatise the lenders, banking analysts.
Both the IOB and CBI are currently under the Prompt Corrective Action (PCA) framework imposed by the Reserve Bank of India (RBI). Under the PCA framework, the central bank imposes certain business restrictions on lenders with weak financial metrics.
The Centre has set an ambitious divestment target of Rs 1.75 lakh crore for FY22.
The government's plans to sell its stakes in Air India, Bharat Petroleum Corporation (BPCL), Shipping Corporation of India and some other companies have been disrupted due to the COVID-19 pandemic
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