In the Union Budget meet on February 1, FM Niramala Sitharaman announced the government’s plan to conduct privatisation of two more public sector banks, besides IDBI Bank, along with one general insurance company, in the financial year FY22 (2021-2022).
The privatisation process will be a part of the government’s disinvestment drive of Rs 1.75 lakh crore.
The two public banks known to be shortlisted for privatisation are Bank of Maharashtra and the Indian Overseas Bank.
As for the general insurer, it could be one of the three, National Insurance, United India Insurance, or Oriental Insurance.
While the initial public offering (IPO) of Life Insurance Corporation of India (LIC) is scheduled for the ongoing financial year (FY22), the privatisation of two state-owned banks could be shifted to the upcoming financial year.
People familiar with the matter have reported that the government still has not gotten the green light from the parliament to put into action the required changes in law needed to start the transaction.
Privatisation of Two Public Banks to be Deferred
While outlining the nation’s budget for the current financial year in February, FM Sitharaman announced that the government will seek buyers for two state-run banks by March 2022.
However, it has been reported that the Finance Ministry has not yet finalized modalities to seek approval from lawmakers for the sale, which leaves little time for the process to be completed this year.
According to an official known to the matter, framing the contours of the deal and finding a suitable buyer will take time, adding to the finance minister’s promise of no employees losing their jobs in these holdings due to the privatisation process.
The government is taking its time to find the most suitable fit buyers for privatising the three entities. This is done to ensure no downsizing of the two public bank lenders, post privatisation.
The privatisation deals of the two public sector banks are likely to be pushed to 2022-2023.
BPCL Disinvestment Process to be Shifted to FY23
As a part of the disinvestment drive, the government also had plans to divest 100% of its stake in the state owned oil refiner, Bharat Petroleum Corporation Limited (BPCL), the deal of which was approved by the Cabinet on November 20, 2019.
The state-owned BPCL is the country’s third-biggest oil refiner and second-largest fuel retailer and the government has plans to sell all of its 52.98% stake in the company to private players.
However, the Covid-19 pandemic led to a slowdown in the preparatory process of the much-awaited LIC IPO, while the disinvestment process of BPCL is most likely to be shifted to the upcoming financial year 2022-2023.
Sources have also confirmed that while the stake sale discussions of BPCL with the potential buyers have slowed down, the divestment idea has not been dropped. Three private players are reportedly showing interest in the BPCL disinvestment, one of which is Vedanta.
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