The government could hive off the non-performing loans of the 2 public sector banks that are to be selected for privatisation and transfer a few of their staff members to other state-run lending institutions in a quote to make them appealing for purchasers.
The federal government is likely to think about only banks that were not part of the current combination, which would exclude Punjab National Bank, Bank of Baroda, Canara Bank and State Bank of India from the privatisation process.
“We might clean up the balance sheet and after that provide the bank for sale, if it would improve evaluations … All alternatives are open,” a senior government authorities said.Finance minister Nirmala Sitharaman stated in the spending plan for FY22 that the government plans to privatise 2 public sector banks and one state-run basic insurer in the next monetary year.The finance ministry is most likely to hold discussions with Niti Aayog over the next 10 days to determine the prospects for privatisation.The federal government will then begin the groundwork for the procedure, which will consist of legal modifications and conversations with the Reserve Bank of India on the requirements for possible buyers.An RBI working group had actually suggested in November that large corporate homes need to be enabled to own banks by modifying the Banking Regulation Act.The interests of workers will likewise be thought about and they might be offered the option to move to another PSB prior to privatisation.Sitharaman told ET in an interview released on February 13 that the interests of all sections consisting of employees would be safeguarded. “We obviously need to work out with those bidders to see that the employees’ interests are protected, not just for today however also if the commitment is to make sure that their pensions will be paid, it will be absolutely something which I will have to bear in mind … We will need to talk with everyone,” she had said.Banks that became part of the consolidation workout will be likely be left out from the privatisation procedure as they are still managing integration issues and privatising them would add to intricacy.”Debt consolidation workout is carried out at numerous levels including branches, ATMs, people, company, software,” the authorities stated, including that the process was not complete in some cases due to the fact that of the disruption caused by Covid-19. The federal government revealed the merger of 10 public sector banks into four big ones in August 2019, lowering the variety of PSBs in the nation to 12 from 27. Asian Bank of Commerce and United Bank of India were merged into Punjab National Bank; Syndicate Bank was merged with Canara Bank; Indian Bank with Allahabad Bank, and Union Bank of India with Andhra Bank and Corporation Bank.Of the 12 PSBS, Indian Overseas Bank, Reserve Bank of India and UCO Bank are under the RBI’s Prompt Corrective Action framework, a set of guidelines for lending institutions that become undercapitalised due to bad property quality or turned susceptible due to loss of profitability.