The Indian government has urged its officials to accelerate the process of divesting stake in at least four state-owned banks, Reuters reported.

The four banks include Punjab & Sind Bank, Bank of Maharashtra, UCO Bank, and IDBI Bank.

The Indian government directly or indirectly owns majority stakes in 12 public sector banks.

The government owns a 47.11% stake in these banks, while the Life Insurance Corporation (LIC), which is also government-owned, holds a 51% stake.

The decision to trim stakes comes after the Reserve Bank of India (RBI) advised the government to cut its stake in the public sector (PSU) banks to 26%, last month.

The country aims to reform the banking sector while asserting the privatization of state-run banks and other institutions.

This move is expected to raise capital for budgeted spending as the Covid-19 pandemic has led to a decline in tax collections.

The report follows speculations that India is looking to privatize over half of its public sector banks and reduce the number of state-owned banks to five, as part of the banking industry overhaul.

The privatization of banks follows the expected rise in bad loans at the state-run banks.

Some officials have advised the government to reshuffle the banks before privatizing them, to cut down losses.

They have suggested offering voluntary retirement and closing down local and international branches, according to Reuters.

Earlier this month, Prime Minister Narendra Modi’s office has written a letter to the finance ministry to expedite the process of privatizing these lenders by March 2021.

One of the sources said that “the process of privatizing the banks has started” and added that some consultations had already taken place.”