Both the banks could see the sale of 51% stake in the first phase of disinvestment.
Share prices of Central Bank of India and Indian Overseas Bank increased ahead of privatisation talks.
Rise In Share Prices
Central Bank of India share price rose over 100% in the last 6 months and was trading at Rs 28.05, up Rs 2.10, or 8.09 percent.
It reached its peak in 52 weeks at Rs 29.65.
Share price of Indian Overseas Bank was trading at Rs 28.05, up Rs 2.25, or 8.72 percent. It has touched a 52-week high of Rs 29.
Selected For Privatisation
These stocks have come into focus since they were chosen by the Cabinet Secretary-led panel to be privatised.
Both the banks could see the sale of 51% stake in the first phase of disinvestment.
The Ministry of Finance is in the process of making legislative amendments so that the privatisation program can proceed.
However, both the banks’ weak financial health could create an obstacle in the govt’s move to privatise them.
Weak Finances And Govt’s Action
The IOB and CBI are currently under the Prompt Corrective Action (PCA) framework imposed by the Reserve Bank of India (RBI).
Under PCA, RBI imposes some business restrictions on lenders with weak financial metrics.
NITI Aayog has recommended state-owned insurer United India Insurance Company to be privatised as per the govt’s plan to privatise one insurance company along with banks.
The centre aims to achieve divestment target of Rs 1.75 lakh crore for FY22.
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