SBI Recommends Selling Govt Banks To Private Companies Because They Are In 'Good Condition'


Sheetal Bhalerao

Sheetal Bhalerao

Jul 09, 2024


In its research report on Monday, SBI said that the government should go ahead with disinvestment of public sector banks (PSBs) as they are in good condition.

SBI Recommends Selling Govt Banks To Private Companies Because They Are In 'Good Condition'

Government Should Go Shead With Disinvestment of PSBs

This report also pitched the consolidation of existing government-owned banks.

Further, the report titled ‘Prelude to Union Budget 2024-25’  mentions, “As banks are in good condition, the government should take stance on disinvestment of PSBs.” 

The report said that the government and Life Insurance Corporation of India are selling an almost 61 percent stake in the lender, while talking about privatization of IDBI Bank.

Adding,“They invited bids from buyers in October 2022. In January 2023, the Department of Investment and Public Asset Management (DIPAM) received several expressions of interest for the IDBI Bank stake on offer. We expect the government to clarify this in the Budget.” 

The government owns over 45 percent stake in IDBI Bank, and LIC has a 49.24 per cent shareholding currently.

Unleash Additional Spending and Thereby, More GST Revenue

This report recommends that the government should tweak the tax on deposit interest and make flat tax treatment across the maturity ladder in line with mutual fund and equity markets.

It further adds, “Household net financial savings has declined to 5.3 percent of GDP in FY23 and is expected to be 5.4 per cent in FY24. If we make the deposit rate attractive in line with MFs, then this could push up household financial savings and CASA.” 

This could unleash additional spending and thereby, more GST revenue to the government as this amount will be in the hands of depositors, as per the report.

Adding,“Increase in bank deposits will bring not only stability in core deposit base and financial system but also financial stability in household savings as the banking system is better regulated and has superior trust as compared to other alternatives with high volatility/risk.” 

Deposits are taxed on an accrual basis and other asset classes only on redemption and there is also a need to remove this treatment, it added.

The report by the Economic Research Department, State Bank of India (SBI), expressed expectation that the government will look into the concerns over the Insolvency and Bankruptcy Code (IBC) that must be improved and expediting cases under the IBC should be a key change.


Sheetal Bhalerao
Sheetal Bhalerao
  • 674 Posts

Subscribe Now!

Get latest news and views related to startups, tech and business

You Might Also Like

Business
Dec. 8, 2022

Beat The Burden Of Medical Inflation With A Health Insurance

As disease rates rise and medical technology develops, treatment costs climb. It’s essential to understand that medical costs are not exclusively associated with hospitals. The cost of prescription drugs, diagnostic procedures, ambulance and operating room fees, consultations with doctors, and other costs are also constantly increasing. All of them could put a big strain on […]

Business
Dec. 8, 2022

3 Biggest Changes Of iOS 16.2 Update That Every iPhone User Should Know!

In its latest update Apple said that it is preparing for the iOS 16.2 update for iPhones across the world. Notably, like the previous release, there are a couple of changes coming for the iPhones.  iOS 16.2 Update Release Date So far, Apple has not announced a release date for iOS 16.2 update. Reportedly, the […]

Business
Dec. 8, 2022

300 Microsoft Employees Create Employee Union, First Time Ever: This Is How Microsoft Reacted

Around 300 workers at Microsoft Corp.’s ZeniMax Studios have commenced the process of forming a union which is said to be the first at the software giant in the US.  Here, Microsoft Corp.’s ZeniMax Studios known for popular video games including Skyrim and Fallout. Forming Union In Microsoft Corp Moreover, the quality assurance employees at […]

Business
Dec. 7, 2022

India Beats China In Air Travel Safety: Ranking Jumps From 102 To 48 In Global Aviation Safety

India’s air safety protocols and executions have improved drastically over the years, as validated by the findings of a specialized agency of the United Nations, the International Civil Aviation Organization or ICAO. The UN watchdog has upgraded India’s ranking in terms of aviation safety to the 48th position, jumping past the rankings of countries like […]

Recent Posts

Related Videos

   

Subscribe Now!

Get latest news and views related to startups, tech and business

who's online