The government will reduce its stake in public sector banks from 51 percent to 26 percent, a move that will help increase institutional and public investment in these banks.
To enable this, the government will present the Banking Law (Amendment) Bill 2021 in the next winter session of Parliament, which begins on November 29. It plans to privatize two public sector banks through the proposed legislation.
According to the purpose of the bill, in order to privatize two public sector banks, amendments are to be made to the Banking Companies (Acquisition and Transfer of Businesses) Act 1970 and 1980, as well as ancillary amendments to be made. to the banking law. Regulation Act, 1949.
The bill is registered for presentation, examination and adoption during the next parliamentary session.
Sources said the move would also help better realize the value of selling government shares.
The move aims to help government-controlled banks raise capital in the market and reduce their dependence on the treasury for capital. It will also allow the government to use the money for development programs, sources said, in addition to helping meet the divestment goal.
A program to privatize public sector banks in consultation with the Reserve Bank of India (RBI) is also planned, sources added.
The government also aims to professionalize the boards of directors of public banks by providing greater expertise at the managerial level, with better remuneration and longer terms of office.
Finance Minister Nirmala Sitharaman, during the presentation of the Union budget for 2021-2022, announced the privatization of two public sector banks as part of the government’s divestment campaign to raise 1.75 lakh crore of rupees during the current financial year.