NITI Aayog to select two PSBs, one insurer for privatisation

NEW DELHI: NITI Aayog will select the public sector banks and general insurance company that will be taken up for privatisation, Financial Services Secretary Debasish Panda told reporters today.

Declining to identify the state-owned banks and general insurer which can be privatised, Panda said, "(In the public sector enterprises policy) there is a mechanism which has already been stipulated which says that NITI Aayog will do the first round of the exercise of selecting and then after that it goes to the core group of secretaries on disinvestment. Thereafter, it goes to the alternate mechanism. So that process has to be followed." The government will privatise two public sector banks and one general insurance company in 2021-22 (Apr-Mar), Finance Minister Nirmala Sitharaman said while presenting the Union Budget on Monday.

"The idea was, what do we do with the remaining banks (after the consolidation) and probably it would be more prudent that the government gets out of it. Then you don’t need the capital to support the banks. So, we retain a strong core public sector and probably divest the other banks," Panda said today. Speaking on the pending sale of the government's residual stake in IDBI Bank, the secretary said that the government has brought an amendment to the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 under the Finance Bill to ensure that the entity continues to retain its banking licence even after it goes into private hands.

Panda said he expects the public sector banks under the Reserve Bank of India's prompt corrective action framework to exit the same by March end. Central Bank of India, Indian Overseas Bank, and UCO Bank are still under the prompt corrective action framework.