At present, India has 12 state-owned banks and this privatisation plan will be carried out by selling majority of stakes in Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank, in a new privatisation proposal the government is currently formulating, and this would be put before the cabinet for approval.
Meanwhile, a leading news channel, quoting government officials said that the government did not identify banks for privatisation, it would be done later. Privatisation or merger of companies is mentioned in new PSE policy and it does not identify any particular banks or companies. Current cabinet proposal includes strategic sectors such as banking, insurance, power, steel, aviation, oil, fertiliser, pharma, defence, railways and mining, said a government official.
The government may need to inject nearly $20 billion into its state-owned banks, as it is expected that the bad loans in the banks could double after these crises brought the economy to a standstill. Indian banks already had Rs 9.35 trillion of soured loans, equivalent to 9.1% of their total assets at the end of September 2019.
Last year, the government had merged ten state-owned banks into four, creating a handful of larger banks in the process and now they are planning to sell the non-merged banks to private entities. Privatisation plan is being worked out, but the divestment plans may not happen in this financial year due to unfavourable market conditions.
