Indian Overseas Bank, Central Bank Of India Will Be Sold To Private Firms? Clarifications Issued..

Indian Overseas Bank (IOB) and Central Bank of India (CBoI) have said that there is no information regarding the reported privatisation of both.

Why The Speculation?

There has been buzz surrounding the banks that the central government will introduce the Banking Laws (Amendment) Bill 2021 in the Winter Session of Parliament.

The bill would pave the way for two public sector banks to be privatised.

In response to reports that IOB and CBoI were the two candidates, IOB shares surged 13.64% to close at Rs 22.50 while CBoI shares rose 10.5% at Rs 22.70.

Received No Communication

CBoI said in response to the news that it does not have any information that it is to be privatised nor is any such negotiation/event taking place.

IOB also denied having received any communication regarding privatisation from the Government.

It added that it is unsure why stock prices rose and that it “may be due to speculation”.

Process Could Be Delayed

Fitch had said in June that the plan to privatise two PSBs in FY22 could be delayed due to political opposition and structural challenges.

Already unions such as All India Bank Officers’ Confederation (AIBOC) have begun rallying public opinion against bank privatisation.

Maharashtra State Bank Employees Federation said that bank employees under the aegis of the United Forum of Bank Unions will go on strikes against the government.

Centre’s Stake

The two banks were recommended for privatisation by NITI Aayog.

The Centre owns 96.4% stake in IOB and 93% in CBoI.

The government would bring down its shareholding below 51%, thereby ceding control.

Other Banks Getting Privatised

Finance minister Nirmala Sitharaman had announced in the Union Budget that two PSBs would be privatised this financial year but gave no names.

IDBI Bank is also expected to be disinvested this fiscal and the strategic disinvestment process has started.

Other public sector lenders that could be privatised include Bank of India and Bank of Maharashtra.

Post privatisation, 10 PSBs would remain in the country.