Privatization Of Govt Banks: No Jobs Will Be Lost, More Jobs Will Be Created
DIPAM Secretary Tuhin Kanta Pandey said that PSU employees need not fear loss of their jobs due to privatisation.
He said that the government has to create awareness that privatisation of state-owned banks will not take away jobs but create them.
Importance Of Privatisation
Banks need to be privatised because if they’re not, the organisations won’t change fast enough and may become obsolete, or will not have sufficient capital to sustain the business.
To facilitate privatisation of public sector banks, Finance Minister Nirmala Sitharaman was expected to bring legislative changes in the Winter Session of the Parliament.
But this had to be put on hold due to a nationwide strike of bank employees’ unions.
Sitharaman had announced privatisation of two state-owned banks in Budget 2021-22.
Pandey said that the bidders for the entire government stake in Bharat Petroleum Corp. Ltd (BPCL) need extra resources because of the large size of the transaction.
The government’s 52.98% stake in the state-run oil retailer is on sale and initial bids have already been received.
One of those bids came from billionaire Anil Agarwal-led Vedanta Group.
Pandey said that the government hasn’t been able to persuade bidders to make financial bids yet.
It will “get a better idea from them, [the] transaction advisors” and will decide on the next step.
So the privatisation will now be pushed to 2022-2023.
It is expected to earn the government up to Rs 50,000 crore.
Pandey said that the draft red herring prospectus for the LIC IPO will be filed next week with stock market regulator SEBI.
The IPO will take place in March.
The government will offload around 25% stake in the first five years from the IPO.
LIC will initially remain under government control by law due to its 51% stake.
Within the first 5 years this will come down to only 25%.
The LIC share sale by March end is critical for the government to meet its shrunken asset-sales target of Rs 78,000 crore for this fiscal year- sharply lower than the Rs 1.75 trillion budgeted last year.
It has raised Rs 12,000 crore so far including Rs 2,700 crore from Air India.
The main transaction left is LIC which will make up for the remaining.