In trying to raise the revenues, the government has shortlisted four middle-sized banks and set them up for privatization under a new push to sell state assets. A report by the news agency Reuters quoted from three government sources, that four banks were shortlisted for privatization. They are the Bank of Maharashtra, the Central Bank of India, Bank of India, Indian Overseas Bank. In fact, two of those banks will be selected for sale in the financial year of 2021-2022 which begins in April, according to the sources added.
Privatization of the banking sector has led to the sector being dominated by state-run behemoths with hundreds of thousands of employees. It is also politically risky because it could put jobs at risk but the Prime Minister of our nation says that the administration aims to make a start with second-tier banks.
The sources have also said that the government is aiming to privatize mid-sized banks in the first round of privatization so as to test the waters. It could also look at some big banks in the upcoming years. Bank of India currently has a workforce of about 50,000 and the Central Bank of India has a workforce of 33,000. The Indian Overseas Bank employs 26,000 people and the Bank of Maharashtra has around 13,000 employees, according to estimates from the respective bank unions.
A source also said that certain factors like the number of employees, the pressure of the trade unions, and political repercussions would be impacting a final decision. The source also noted that the privatization of a particular bank could also change at the last moment due to these factors.
The government is currently hoping that the Reserve Bank of India, which is the country’s banking regulator, will soon ease the lending restrictions on Indian Overseas Bank. This will happen after an improvement in the lender’s finances that could help its sale.