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No proposal being considered for public sector bank merger currently: Dr Bhagwat Karad

The Centre is not considering the merger of any public sector bank (PSB) currently, said Minister of State (MoS) for Finance Dr Bhagwat Karad in the Lok Sabha
No proposal being considered for public sector bank merger currently: Dr Bhagwat Karad
No proposal being considered for public sector bank merger currently: Dr Bhagwat Karad
  • Dr Karad said that in line with the announcement made by the Finance Minister, the government will be taking up privatisation of two public sector banks
  • Even though the government is committed to take up the privatisation of two PSBs in this financial year, sources have said that it is unlikely that the process will materialise this year

New Delhi: The Centre is not considering the merger of any public sector bank (PSB) currently, said Minister of State (MoS) for Finance Dr Bhagwat Karad in the Lok Sabha on Monday. On being asked if the government has received any proposal for the consolidation of public sector banks, Dr Karad said in a written response, “No specific proposal to amalgamate more PSBs is currently under consideration of the Government.” However, he added that in line with the announcement made by Finance Minister Nirmala Sitharaman earlier this year in her Budget speech, the government will be taking up privatisation of two public sector banks.

“The Finance Minister, in her speech on the Union Budget for the financial year 2021-22, announced the Government’s intent to take up privatisation of two PSBs,” said Dr Karad.

Public sector bank privatisation

Even though the government is committed to take up the privatisation of two PSBs in this financial year, sources have said that it is unlikely that the disinvestment process will materialise this year, with just seven months remaining in the current financial year. The sources have claimed that the privatisation process is likely to get pushed to the next financial year. According to media reports, Central Bank of India and Indian Overseas Bank have been shortlisted for privatisation. In addition, Cabinet Committee on Economic Affairs (CCEA) has also recently approved the strategic disinvestment and transfer of management control in IDBI Bank

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Background

For FY22, the government has set for itself a PSU disinvestment target of Rs 1.75 lakh crore. The target is cautious when compared to the Rs 2.1 lakh crore planned for FY21. However, since the government managed to raise only Rs 32,835.45 crore in FY21, the FY22 target has been kept at a level which is achievable, especially considering the uncertainties brought on by the COVID-19 pandemic. The Centre has also stepped on the accelerator as soon as the economy showed signs of improvement by beginning the process of disinvestment of a number of PSUs like Neelanchal Ispat Nigam Ltd (NINL), Bharat Earth Movers Ltd (BEML), Shipping Corporation of India (SCI), Pawan Hans, among others. However, the disinvestment process has been impacted by the second wave of the COVID-19 pandemic and it remains to be seen how many of the planned processes materialise in this fiscal year.

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