Finance Minister Nirmala Sitharaman has affirmed that the planned privatization of public sector banks will proceed as scheduled. Speaking to the media on May 29 in Mumbai, Sitharaman stated, “There is no change in the bank privatization plans; they will continue according to the predetermined timetable.” This announcement was made on the occasion of the Narendra Modi government’s completion of nine years in power, as the finance minister addressed the media in the country’s financial capital.
In her Budget speech in 2021, Sitharaman had unveiled the government’s intention to privatize two public sector banks during the fiscal year 2021-22. She stated, “In addition to IDBI Bank, we intend to pursue the privatization of two Public Sector Banks and one General Insurance company in the year 2021-22. This would necessitate legislative amendments, and I plan to introduce these amendments in this Session itself,” as declared in February 2021. However, there appears to have been minimal progress on this front. Recent reports suggest that the government may establish a committee to compile a fresh list of state-owned banks eligible for privatization, with the Central Bank of India and Indian Overseas Bank reportedly recommended for privatization by NITI Aayog as early as April 2021.
The Economic Times, citing an unnamed government official, reported on May 16 that bank privatization remains a priority, but a reassessment is needed to determine which lender can be offered for privatization based on investor interest and other relevant factors. It is worth noting that all banks in India are currently profitable.
India presently has 12 public sector banks, including Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Indian Bank, Indian Overseas Bank, Punjab & Sind Bank, Punjab National Bank, State Bank of India, UCO Bank, and Union Bank of India.