#Budget2021: 2 Govt Banks & LIC Will Be Privatised In 2021; Which Public Sector Banks Are They?

By Malvika Gurung Last updated Feb 2, 2021

Two more public sector banks and insurance companies will be privatised in FY22, besides IDBI bank.

According to the budget speech presented by Finance Minister Nirmala Sitharaman yesterday, the government will conduct the privatisation process of two more public sector banks, besides IDBI Bank, along with two insurance companies too, in the upcoming financial year, i.e. FY22.

Just recently, we informed you of the Government’s plan of pushing the disinvestment process of IDBI and IPO of national insurer LIC, to the upcoming financial year.

In her budget speech, Sitharaman confirms shifting the IPO process for LIC to FY22, along with introducing privatisation processes for two PSBs and two insurance companies, while allocating Rs 20,000 crore for recapitalisation of banks.

LIC IPO to Go Live in 2021-2022

As mentioned above, it is absolutely positive now that the initial public offering of Life Insurance Corporation of India (LIC) will now be launched in 2021-22.

According to a source,

“The asset reconstruction company or ARC will take over all stressed assets from bank books and manage it before selling it further to private parties such as distressed assets funds, to unlock value.

The idea of a bad bank was in discussion for some time.”

Government’s New Amendment Proposal

In order to ensure the deposit insurance of Rs 5 lakh per account is recovered by the depositors in a timely and hassle-free manner, despite the condition of the bank, the government is working on an amendment.

There will be an alternate framework for debt resolution for micro-small and medium enterprises.

There will also be a permanent institutional framework put into place, which will provide a major boost to the bond market.

This will buy investment grade securities from companies, resulting in building depth and liquidity in the corporate bond market.

Additionally, a development finance institution with an initial capital of Rs 20,000 crore will be put into place, which will be capable of lending infrastructure projects worth Rs 5 trillion in three years, providing a major boost to the infrastructure sector.