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NITI Aayog to finalise names of 2 public sector banks for privatisation soon

Government think-tank NITI Aayog, in consultation with the Finance Ministry, has started deliberations to finalise the names of two public sector banks that will be privatised in the current fiscal as part of the disinvestment process. NITI Aayog has been entrusted with the task of selection of names of two public sector banks and one general insurance company for the privatisation as announced in the Budget 2021-22.

The work in this respect is going on, sources said, adding, a couple of meetings have been convened by the NITI Aayog on the subject.

There are various aspects that have to be looked into including regulatory issues, HR management, financial health etc before reaching a conclusion, sources added.

Once NITI Aayog makes its recommendations, it will be vetted by the Core Group of Secretaries on Disinvestment headed by Cabinet Secretary.

The other members of the high-level panel are Economic Affairs Secretary, Revenue Secretary, Expenditure Secretary, Corporate Affairs Secretary, Secretary Legal Affairs, Secretary Department of Public Enterprises, Secretary Department of Investment and Public Asset Management (DIPAM) and the Secretary of administrative department.

Following clearance from the Core Group of Secretaries, the finalised names will go to Alternative Mechanism (AM) for its approval and eventually to the Cabinet headed by the Prime Minister for the final nod.

Changes on the regulatory side to facilitate privatisation would start after the Cabinet approval.

Last month, Finance Minister Nirmala Sitharaman had said “interests of workers of banks which are likely to be privatised will absolutely be protected whether their salaries or scale or pension all will be taken care of.”

Explaining the rationale behind the privatisation, Sitharaman had said that banks in the country needed to be bigger, just like the State Bank of India (SBI).

“We need banks which are going to be able to scale up… We want banks that are going to be able to meet the aspirational needs of this country,” Sitharaman had said, adding that a lot of thought had gone behind the intention to privatise some public sector banks.

Meanwhile, banking sector regulator RBI also said it is in discussion with the government over the privatisation of public sector banks.

The government has budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including 2 PSU banks and one insurance company, during the current financial year. The amount is lower than the record budgeted Rs 2.10 lakh crore to be raised from CPSE disinvestment in the last fiscal.

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