The government is aiming at privatising over half of its state-run lenders and lower the count of state run banks to just 5, a source from the government and banking said.
In the first phase, there shall be major stake sale in Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank. "The idea is to have 4-5 government owned banks," said one senior government official. At present, India has 12 state-owned banks.
The plan for this shall be put in a new privatization proposal the government is preparing and then put before the Cabinet for approval. Though the finance ministry did made any comment on the matter.
The government is working on a privatisation spree for raising money by selling assets in non-core companies and sectors when the country is strapped for funds due to lack of economic growth caused by the coronavirus pandemic. "The government has already said that there will be no more mergers (between state-owned banks) so the only option for them is to divest stakes," a senior official at a state-owned bank said.
Earlier, the government merged 10 PSBs into 4, leading to a creation of just a handful of large banks.