Which banks to be privatized? | Fusion - WeRIndia

Which banks to be privatized?

Which banks to be privatized?

Finance Minister Nirmala Sitharaman in her Budget speech announced the government’s plans of privatizing two Public Sector Banks (PSBs) and one insurance company in the next financial year.

Besides, Modi government also announced to finish the disinvestment process of IDBI Bank in the next financial year.

Financial analysts say that it indicates the intention of the government to privatize public sector banks which will be carried out with two PSBs on a pilot basis.

This decision was expected by many analysts as the merger of 13 PSBs was done in the last year. These banks merged into five banks.

Now, the question is which two PSBs will be privatized? The answer to this question is different as per the opinion of various analysts.

While some analysts assumed that these two banks are Punjab National Bank (PNB) and Bank of Baroda (BOB), some others anticipated that Punjab and Sind Bank and Bank of Maharashtra are the potential candidates.

Among merger banks, both PNB and BOB have good quality. After the merger, they have improved their structure. Hence, these banks will attract investors. Hence, they are assumed to be potential candidates for privatization in merger banks.

In non-merger banks, Both Punjab and Sind Bank and Bank of Maharashtra have the financial aid from the government for repaying their debts. Hence they can attract investors.

Other banks that kept out of merger are Indian Overseas Bank, UCO Bank, Central Bank, and Bank of India.

Among the above four banks, the first three banks are under PCA (prompt corrective action) for their asset quality deterioration and lower capital levels. Hence, the Reserve Bank of India put them under the PCA framework. Hence, these three banks are unlikely to be privatized due to poor demand from investors.

The government has not announced the names of PSBs that are going to be privatized. Hence, assumptions are going on among investors and financial analysts.

However, bank unions said that they would carry out agitations and strikes to oppose the privatization of banks.

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