NITI Aayog submits final list of PSU banks to be privatised

Government think tank Niti Aayog has submitted to the Core Group of Secretaries on Disinvestment the finalised names of PSU banks to be privatised in the current fiscal as part of the disinvestment process, a senior government official said.

Niti Aayog has been entrusted with the task of selection of names of two public sector banks and one general insurance company for the privatisation as announced in the Budget 2021-22.

"We have submitted the names (of PSU banks) to the Core Group of Secretaries on Disinvestment," the official said.

The other members of the high-level panel are economic affairs secretary, revenue secretary, expenditure secretary, corporate affairs secretary, legal affairs secretary, Department of Public Enterprises secretary, Department of Investment and Public Asset Management (DIPAM) secretary and administrative department secretary.

Following the clearance from the Core Group of Secretaries, headed by the Cabinet Secretary, the finalised names will go to Alternative Mechanism (AM) for its approval and eventually to the Cabinet headed by the Prime Minister for the final nod.

Changes on the regulatory side to facilitate privatisation would start after the Cabinet approval.

Finance Minister Nirmala Sitharaman had recently said "interests of workers of banks which are likely to be privatised will absolutely be protected whether their salaries or scale or pension all will be taken care of".

Explaining the rationale behind the privatisation, Sitharaman had said that banks in the country needed to be bigger, just like the State Bank of India (SBI).

"We need banks which are going to be able to scale up... We want banks that are going to be able to meet the aspirational needs of this country," Sitharaman had said, adding that a lot of thought had gone behind the intention to privatise some public sector banks.

The government has budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including 2 PSU banks and one insurance company, during the current financial year. The amount is lower than the record budgeted Rs 2.10 lakh crore to be raised from CPSE disinvestment in the last fiscal.

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NITI Aayog suggests creation of Dak Bank

In a bid to further deepen financial inclusion in the country, the NITI Aayog has suggested the creation of a Dak Bank -- postal bank -- by merging the regional rural banks, among other recommendations to the government.

In a recent presentation to the Prime Minister's Office and the Finance Ministry, the NITI Aayog has suggested the over 1.5 lakh post offices in the country should be made outlets for the proposed Dak Bank, sources said.

Further, the think tank has also suggested easier norms for granting bank licenses.

In another major recommendation, it has suggested privatisation of three banks, Punjab & Sind Bank, UCO Bank and the Bank of Maharashtra, said people in the know.

The suggestion comes at a time when a new disinvestment policy is in the works and the government is already considering bringing the banking and insurance sector under its ambit.

The likelihood of the government going for privatisation of public sector banks has also drawn criticism and protests for bank workers' unions.

In the banking space, with the latest merger of public sector banks coming into effect in April, India currently has 12 public sector banks, down from 27 in 2017.

During the announcement of the 'Aatmanirbhar Bharat' economic package in May, Finance Minister Nirmala Sitharaman had said that the Centre will come up with a new Public Sector Enterprise Policy, and open up all the sectors to the private sector.

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NITI Aayog recommends privatization of three public sector lenders

NITI AAYOG has recommended the government to privatise three public sector banks - Punjab & Sind Bank, UCO Bank and Bank of Maharashtra. The other major recommendations to Prime Minister's Office (PMO) and Finance Ministry functionaries include merger of all regional rural banks, introducing flexibility in participation of non-banking financial companies' (NBFCs) participation in the debt market and increasing private debt to GDP ratio from the existing 54 per cent to 100 per cent over coming 10 years, CNBC-TV18 reported citing unidentified sources. The government think-tank NITI Aayog has also pitched for making the Indian data credible, the report added.

Earlier this week, there were reports that the government may merge loss-making entities India Post, along with the regional rural banks (RRBs), into a full-fledged public sector bank to beat down the mounting losses.

India is looking to privatise more than half of its state-owned banks to reduce the number of government-owned lenders to just five as part of an overhaul of the banking industry, according to a recent report by Reuters. The first part of the plan would be to sell majority stakes in Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank, leading to an effective privatisation of these state-owned lenders, the global news agency had reported citing an unidentified government official.

Meanwhile, on Wednesday, Prime Minister Narendra Modi held a brainstorming session with banking and financial sector stakeholders and discussed various measures to revive the economy hit hard by the COVID-19 crisis.

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