Privatisation-bound banks may come out with VRS

New Delhi, June 8: Two state-owned banks being picked up for privatisation by the government are likely to come out with an attractive voluntary retirement scheme (VRS) to get rid of the extra flab, sources said.

Finance minister Nirmala Sitharaman while unveiling Budget 2021-22 on February 1 had announced that the government proposed to take up the privatisation of two public sector banks (PSBs) and one general insurance company.

An attractive VRS will make them lean and fit for takeover by the private sector entities that are keen to enter the banking space, the sources said.

VRS is not forced exit but option for those who would like to take early retirement with good financial package, the sources said, adding that it has been done in the past before the consolidation of some of the PSBs.

The Niti Aayog, which has been entrusted with the job of identifying suitable candidates for the privatisation, has recommended the names to a high-level panel headed by Cabinet secretary Rajiv Gauba.

Central Bank of India, Indian Overseas Bank, Bank of Maharashtra and Bank of India are some of the names that may be considered for privatisation by the Core Group of Secretaries on Disinvestment.

Following clearance from the Core Group of Secretaries, the finalised names will go to the Alternative Mechanism (AM) for its approval and eventually to the Cabinet headed by Prime Minister Narendra Modi for the final nod.

Changes on the regulatory side to facilitate privatisation would start after the Cabinet approval.