Govt Still Undecided On Privatisation Of These 2 Govt Banks; Unauthorised Use Of ‘Banks’ Banned

The Indian banking sector is under overhaul in recent years. It has witnessed heavy NPAs and Mergers of various Public Sector Banks. It is also witnessing an attack by a parallel currency system called Cryptocurrency. And as promised by the government of India, it also witnessing the privatization of public sector banks. But as the things are going on, the road to privatization might just be far from over.

Government yet to take the decision of privatization of two banks

Recently, Finance Minister Nirmala Sitharaman announced that the cabinet committee on privatization is yet to make a decision with regard to divesting two public sector banks.

In budget 2021-22, the government had announced its intent to take up privatization of two public sector banks (PSBs) during the year, she said in the Lok Sabha.

“Consideration of various issues related to disinvestment, which inter alia, include selection of the bank(s) is entrusted to the Cabinet committee designated for this purpose. Decision by the Cabinet committee concerned for privatization of PSBs has not been taken in this regard,” she added further.

It should be noted that, during the current financial year, the government has budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including two PSBs and one insurance company.

RBI cautions against the use of the word ‘Bank’ by Co-Operatives

The Finance Minister also informed that the RBI has cautioned members of the public against some cooperative societies using the word ‘bank’ as part of their names and accepting deposits from non-members/associate members.

This is tantamount to conducting banking business without obtaining a banking license from RBI, in violation of the provisions of the Banking Regulation Act, 1949.

RBI has also requested chief secretaries of all the states and Union Territories and the Central Registrar of Cooperative Societies to take necessary action against such unlicensed entities operating in their respective jurisdictions.

It should be noted that the use of the term ‘bank’ as part of the societies’ name results in a false impression among the public that such co-operative societies are banks that are under the regulation and supervision of RBI and depositors are covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) protection.

Hence people should take caution in dealing with ‘Co-Operative Societies’ which are masquerading as ‘banks’.