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Government may privatize State Bank of India and ONGC


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Finance Minister Nirmala Sitharaman recently expressed the government’s openness to the idea of disinvestment of equity stake in blue-chip Public Sector Undertakings (PSUs), including State Bank of India (SBI) and Oil and Natural Gas Corp (ONGC). In an exclusive interview with Network18, she stated that the government is not against holding a minority stake (less than 50 percent) in key strategic public sector companies. When asked if she was okay with holding 49 percent or less in PSUs like SBI and ONGC, Sitharaman responded affirmatively.

Nationalized Banks (Government Shareholding %, as at end-March 2023)

  • State Bank of India (57.59%)
  • Canara Bank (62.93%)
  • Bank of Baroda (63.97%)
  • Punjab National Bank (73.15%)
  • Indian Bank (79.86%)
  • Bank of India (81.41%)
  • Union Bank of India (76.99%)
  • Bank of Maharashtra (90.90%)
  • Central Bank of India (93.08%)
  • UCO Bank (95.39%)
  • Indian Overseas Bank (96.38%)
  • Punjab and Sind Bank (98.25%)

Government’s Approach to Disinvestment

The government has been actively pursuing divestment in recent years, selling stakes in numerous publicly listed and privately held companies. However, it has only sold the controlling stake in Air India to the Tata Group. Sitharaman emphasized that the government aims to raise the valuation of PSUs and ensure that their market performance is favorable. She mentioned that the government has released shares into the market to facilitate private ownership and improve the vibrancy, share prices, and dividends of public sector listed companies.

Government’s Focus on Valuation and Private Sector Participation

Sitharaman highlighted the government’s commitment to raising the valuation of PSUs and allowing private sector participation in core strategic sectors. The government aims to have only a minimum presence in these sectors, while ensuring that the valuations of PSUs are maintained and the market views them favorably. This approach is aimed at bridging the historical valuation gap between government-owned companies and their private counterparts.

Conclusion

Finance Minister Nirmala Sitharaman’s recent statements indicate the government’s openness to disinvestment of equity stake in PSUs, including SBI and ONGC. The government is willing to hold a minority stake in key strategic public sector companies. The focus is on raising the valuation of PSUs, improving their market performance, and allowing private sector participation in core strategic sectors. This approach aims to bring vibrancy to public sector listed companies and ensure that the market views them favorably.

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