The Indian government has reportedly shortlisted four state-owned banks for potential privatisation to increase the state revenue by selling its assets in these banks.
Based on its sources, Reuters reported that these four mid-sized banks include Bank of Maharashtra, Bank of India, Indian Overseas Bank and the Central Bank of India.
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Among the four banks, Bank of India has the highest staff headcount with 50,000 employees followed by Central Bank of India with 33,000, Indian Overseas Bank with 26,000, and Bank of Maharashtra with nearly 13,000 employees.
Initially, any two banks will be put up for sale starting from the 2021-22 financial year. One of these could be Bank of Maharashtra because of its smaller workforce, according to the report.
One of the sources said that the actual privatisation process could take five to six months to start.
The Indian government’s move to start with small and mid-sized banks in its first round of privatisation aims at testing possible consequences.
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By GlobalDataWhile talking to Reuters, one of the sources said: “Factors like number of employees, pressure of the trade unions and political repercussions would impact a final decision.” The source further stated that these factors could be decisive in influencing a change even at the last minute.
Sources also hinted at the possible privatisation of bigger banks in the coming years.
However, India’s largest lender State Bank of India (SBI) is to remain in state control, given its strategic need in maintaining rural credit in India, added the report.
The finance ministry has not released any official announcement on this matter.
Meanwhile, recently, India’s finance minister Nirmala Sitharaman in her budget speech unveiled plans to set up a bad bank to manage soured loans.
Sitharaman also said that the government is planning to inject $2.7bn into state-run banks from 1 April 2021.
