According to three administrative sources, the Government of India has shortlisted four mid-sized state-owned financial institutions for privatization. As mentioned in Budget 2021, the Government is all set for disinvestment in PSUs. It is aiming to sell state assets and boost Government revenues.
Privatization of the banking sector may risk the employment of thousands of employees but the Government is seeking the establishment of second-tier banks.
The Banks that are shortlisted for privatization are the Central Bank of India, Bank of Maharashtra, Indian Overseas Bank, and Bank of India. Although no official statement has been made by the administration about such privatization, two officials told about the plan of the Government to Reuters.
According to the officials, two of these banks will be shortlisted for sale in the financial year 2021/2022. The Government is planning to sell the mid-sized banks to recognize the consequences of the step. If the plan succeeds then the country may experience privatization of bigger banks in the upcoming years.
However, the Government will continue holding predominance in the ‘strategic bank’ of the country, that is, the State Bank of India.
According to estimates from bank unions, the Bank of India has a staff of about 50,000 employees. On the other hand, the Central Bank of India has 33,000 employees in its organization. The Indian Overseas Bank comprises 26,000 members while the Bank of Maharashtra possesses a workforce of 13,000 white collars.
The sources believe that the Bank of Maharashtra has a smaller workforce due to which is easier to privatize. Thus, it is anticipated that the Bank of Maharashtra will be sold initially.
On 15th February, the workers of these banks initiated a two-day strike against privatization. Although according to sources, privatization may take up to 5-6 months.
The public has not favored the privatization of PSUs yet, and the Government may face some crucial challenges while attempting disinvestment. It is yet to be seen what new challenges will disinvestment bring for the economy of the country.