Recently, in her budget speech, Finance Minister Nirmala Sitharaman made an announcement regarding the privatisation of banks. Now, all eyes are on those public sector banks. As per some analysts report, the probable candidates for this privatisation move will be Punjab & Sind Bank, Bank of Maharashtra and Bank of India. Primarily, this is because the six banks kept out of merger, Indian Overseas Bank, Central Bank and UCO Bank are under PCA (prompt-corrective action). While presenting the budge 2021, Sitharaman announced the plan to privatise two state-run banks, other than IDBI Bank.
Experts are assuming that the banks which are not in the list of mergers will go through privatisation process. The government is looking to merge 13 banks into five banks. Owing to poor investor demand, PCA banks are less likely to be put up for privatisation. Talking about the six banks out of merger, they are Bank of Maharashtra, Indian Overseas Bank, Central Bank of India, Bank of India, Punjab and Sind Bank and UCO Bank. Apart from this, privatisation of Bank of India is unlikely due its large size.
It is also believed that the most probable candidates will be from the pool of banks which were not part of consolidation. These candidates are small and are not likely to offer any material resources to the government. This has the potential to work as a test case for privatisation of other major public sector banks in future. However, in the process of privatisation, the structure of these banks will be a dampener.