A senior government official has indicated that the anticipated privatisation of public sector banks (PSBs) is unlikely to occur prior to the 2024 general elections.
The official, who preferred to remain anonymous, stated that without the necessary legislation, privatisation cannot proceed.
The official further explained that amendments to the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, would be necessary to facilitate the privatisation process.
These Acts, which were instrumental in the nationalisation of banks in two stages, would need to be revised in order to enable privatisation.elopments are expected until after the 2024 general elections.
India presently consists of 12 public sector banks, namely 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.
Despite being a recurring objective for successive governments, the process of bank privatisation has encountered significant obstacles primarily due to strong opposition from trade unions. As a result, the plan has faced hurdles and failed to advance thus far.
During the presentation of Budget 2021-22, Finance Minister Nirmala Sitharaman had announced the privatisation of Public Sector Banks (PSBs) as part of the disinvestment drive aimed at raising Rs 1.75 lakh crore.
Initially, the Finance Minister had stated that, apart from IDBI Bank, the government planned to undertake the privatisation of two public sector banks and one general insurance company in the fiscal year 2021-22. However, no further progress was made regarding this announcement.
The finance ministry official mentioned earlier stated, “Every government makes decisions at the appropriate time. Therefore, I do not anticipate any developments before the general elections.”
The official further clarified that the case of IDBI Bank is unique because it is categorized as a ‘private sector’ bank, with the government holding a stake, rather than being a typical public sector bank.