In February 2021, in the midst of a pandemic, Finance Minister Nirmala Sitharaman had presented the Union budget 2021-2022. One of the parts of the budget which was critiqued widely was its mega privatisation initiative which for the first time included the privatisation of public sector banks (PSB)s to fulfill a disinvestment target of Rs. 1.75 lakh crore for the financial year 2022.
The announcement by Sitharaman was followed by a protests by almost a million bank employees and officers throughout the country as part of the two-day nationwide strike called by the UFBU, an umbrella body of nine unions on March 15 and 16.
The privatisation drives through selloffs was affected by the deadly second wave of COVID19 in the country.
Four months after the plan was presented by the government, according to reports, there is a probability that the Center based on the recommendations put forward by government think tank NITI Aayog, may decide on selling its stake in the Central Bank of India and Indian Overseas Bank (IOB). Along with that, the possibility for the sale of Bank of India (BoI) is high as well, TOI has reported.
To Save Public Sector, Need a Mass Movement Against Privatisation
On the basis of the current share price, both the banks are together valued at Rs. 44,000 crore and IOB’s market cap is estimated at Rs. 31,641 crore.
Currently NITI Aayog’s recommendations is being reviewed by various finance and disinvestment departments comprising of groups of officers and ministers. The Department of Investment and Public Asset Management (DIPAM), and the Department of Financial Services will finalise the names of the public sector banks to be sold off under the Center’s PSE (Public Sector Enterprises) policy. Law and regulations provide certain special exemptions for state-run entities in several areas which is why the Reserved Bank of India (RBI) will also be consulted with regards to this proposal.
Earlier, in May the Cabinet Committee on Economic Affairs, chaired by PM Narendra Modi had given the in-principle approval for the disinvestment and transfer of management control in IDBI bank.
The Center’s line of reasoning has claimed that a strategic buyer will introduce more capital and do technological upscaling along with better management which will prove to be beneficial for the businesses of these banks and support the economy better.
Before the PSBs can be sold off, they need to be transferred out of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and (nationalisation) 1980 to the Companies Act.
