In a privatization overhaul, India is reportedly mulling plans to disintegrate all the 12 presently functioning state-run banks and retain just five of them, news agency Reuters reports.
According to top government and banking sources, this plan is a move to ‘overhaul’ the current government lenders in the country and privatizes over half of them.
“The idea is to have 4-5 government owned banks,” one senior official told Reuters. “Now we are thinking of selling the unmerged banks to private players,” the official said.
At present there are six independent banks – Bank of India, Central Bank of India, Indian Overseas Bank, Punjab and Sind Bank, Uco Bank, and Bank of Maharashtra.
Earlier this year, in a similar move, the government collapsed many state-owned banks into bigger and stronger mergers, according to media reports. Punjab National Bank, Andhra Bank, Canara Bank, Corporation Bank, and Allahabad Bank were fortified by merging other state lenders, effective from April 1.
After this year’s April merger, the count of state banks was 12 PSUs – six independent public sector banks and six merged banks. However, according to Reuters, the government will no longer go with mergers between state-owned banks.
To unfold the plan, the Indian government will start by selling the majority of the stakes in Bank of Maharashtra, Punjab & Sind Bank, Indian Overseas Bank, UCO Bank, Central Bank of India and Bank of India to privatize these state-owned banks.
However, the step will need cabinet approaval, once the government submits a privatization proposal, according to the report. The Finance Ministry of India did not comment on Reuters‘ request.
At present, there are 2 private sector banks in India. many government committees, including India’s Apex Reserve Bank of India, has reportedly suggested no more than 5 state-owned banks. This plan is in tandem with the suggestion.