Privatization Of PSU Banks Is Postponed: Govt May Not Sell PSU Banks To Private Firms Except This Bank

As per reports coming in, Govt may not privatize PSU banks this year, except for IDBI Bank.

Besides, Govt stake in some PSU banks can be brought down, as part of the privatization process; which will mean that Govt may not sell entire banks to private sector, but only reduce their stake.

What exactly is happening here?

Govt May Not Sell PSU Banks To Private Firms

Since last few days, reports had come that NITI Aayog has asked Govt to make several banks private by selling them off to private firms.

Uco Bank, Punjab & Sind Bank and Bank of Maharashtra were the top names in this regard.

Now, as per fresh reports coming in, Govt may not sell these banks to private sector, atleast not in this financial year.

Govt may sell their entire stake in IDBI Bank, and make it private in FY21, but not the other banks.

This means that Govt may not be able to meet their disinvestment target for 2020-21.

Govt May Reduce Stake In Some Banks

At the same time, Govt is all set to reduce their stake in some PSU banks, since RBI has suggested the same.

For instance, in IDBI Bank, Govt controls 47.1%, which can be brought down to 26%.

Interestingly, LIC is the largest stake holder in IDBI Bank with 51% share.

Govt has already set a target of Rs 2.1 lakh crore revenue generation via selling stake in PSU banks and companies, but the biggest roadblock which seems as of now, is defining strategic PSUs.

Strategic PSU Sale: What Is The Obstacle?

Govt wants to clearly define strategic and non-strategic sectors, and the disinvestment process hinges on this definition.

And it seems that the Govt hasnt been able to clearly define this.

An unnamed source said, “However, it will all depend on which sectors are finally part of the strategic sector list. The Cabinet will soon take a call on this issue,”

Once Govt defines a sector as strategic, then a maximum of 4 PSUs will be allowed to operate in that sector, and more and more private companies will be allowed to operate in that sector.

Around 23 PSUs are proposed to be sold to private companies, under this plan.

We will keep you updated, as more details come in.