The government will introduce a bill in the winter session of Parliament to make necessary changes before privatization of both the banks. NS
and has reportedly been shortlisted by Niti Aayog for settlement. However, the final decision is yet to be taken.
“The upcoming bill will clear the way for necessary regulatory approvals for the privatization of two public sector banks (public sector banks) but we may prefer to retain some stake and reduce it at a later stage.”
Banking on Better Valuations
A similar strategy is being followed in the case of state-run BEML (formerly Bharat Earth Movers Limited), where the government is disinvesting 26% of the equity with management control of the Bengaluru-based company. The government holds 54.03% stake in the company. “The necessary changes in the (banking) laws have been reviewed by the Law Ministry. We will soon take it to the cabinet so that it can be taken up by Parliament,” said the official above.
The Banking Laws Amendment Bill, 2021 will amend the Banking Companies Acquisition and Transfer of Undertakings Act, 1970 and 1980, and make sudden amendments to the Banking Regulation Act, 1949.
Another official aware of the developments said, “In the case of IDBI Bank also we have said that the respective shareholding limit to be disinvested will be decided at the time of structuring the transaction in consultation with the Reserve Bank of India. IDBI Bank is also in the list of asset-sales of the government.
He said that parallel consultations are on with the banking regulator, Reserve Bank of India (RBI) for relaxation in ownership and management norms. These are intended to allow banks to make room for a wider pool of bidders such as non-banking finance companies (NBFCs), which are owned by corporate groups.
Finance Minister Nirmala Sitharaman In February’s budget speech, the government announced the privatization of two state-owned banks as part of its disinvestment programme. “Apart from IDBI Bank, we propose to privatize two public sector banks and one general insurance company in the year 2021-22,” she had said.