India is planning to privatise certain state-owned lenders as part of its plan to transform the banking sector.
According to a Reuters report, the plan includes privatising around half of the 12 state-owned lenders.
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A government official told the news agency that the plan includes divesting majority stakes in Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank.
The move, if executed, will reduce the number of state-owned lenders to five.
The plan is expected to be incorporated in a new privatisation proposal currently being devised by the government.
Subsequently, the proposal will be tabled for union cabinet approval.
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By GlobalDataHowever, the Ministry of Finance declined to comment on the matter.
A senior official at a state-owned bank told the news agency: “The government has already said that there will be no more mergers (between state-owned banks) so the only option for them is to divest stakes.”
The move comes at a time when the Indian banking sector is anticipating a rise in defaults following the Covid-19 crisis.
Notably, the Indian Government announced a mega merger plan last year to combine ten state-owned lenders into four entities. The merger became effective in April this year.
