PSBs rally up to 20% on privatisation buzz

Shares of four PSU banks—Bank of Maharashtra, Bank of India, Central Bank of India and Indian Overseas Bank— rallied up to 20 per cent on speculations that the government may privatise them.

Share prices of the four PSU banks hit the upper circuit after a news wire report said, “Government has shortlisted four midsized state-run banks for privatisation,” and also named them saying, “The four banks on the shortlist are Bank of Maharashtra, Bank of India, Indian Overseas Bank and the Central Bank of India.”

On the NSE, Bank of Maharashtra shares gained 19.81 per cent, IOB gained 19.63 per cent, Bank of India (19.97 per cent), and Central Bank of India (19.71 per cent) at market close.

The market

is

eagerly waiting for names of the two PSU banks that finance minister Nirmala Sitharaman said would privatise. The government has not officially issued a list of PSU banks to be privatised and it could take a few months for it to shortlist the banks.

“Other than IDBI Bank, we propose to take up the privatisation of two public sector banks and one general insurance company in the year 2021-22. This would require legislative amendments and I propose to introduce the amendments in this session itself,” the FM had said in her Budget speech.

The government will consult and work with the Reserve Bank of India for executing privatisation of PSU Banks, she said at a post-Budget interaction.

ThegGovernment has to bring amendments to Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 & Banking Companies (Acquisition and Transfer of Undertakings) Act

1980.

These acts led to the nationalisation of banks in two phases and provisions of these laws have to be changed for the privatisation of banks, according to legal experts.

As the government has already announced the list of legislative business for the Budget session, it is expected that these amendments may be introduced in the monsoon session or later during the year, sources said.

The Budget session is scheduled to take up as many as 38 Bills, including the Finance Bill 2021, Supplementary Demands for Grants for 2020-21 and related Appropriation Bill, National Bank for Financing Infrastructure and Development Bill,

2021, and Cryptocurrency and Regulation of Official Digital Currency Bill,

2021.