Privatization of PSBs now likely only after 2024 polls

The plan to privatize two banks and a government insurer may be put on hold until at least the general election in 2024, when the proposal will be re-assessed by the new administration, three officials aware of the development said.

- Subhash Narayan, Gulveen Aulakh

The privatization process of the banks, requiring changes to the Banking Regulation Act, has been put on hold as further work remains to be done before proceeding with the plan, they said, requesting anonymity.

The process has been suspended indefinitely because the bearish market conditions and concerns about a global recession would also depress valuations, one of the three people cited earlier said.

The Union budget for the year starting April proposed amendments to the Banking Regulation Act, the Banking Companies Act and the Reserve Bank of India Act. But such amendments will only be carried out to improve bank governance and boost investors’ protection, and not to let the government reduce its equity in public sector banks PSBs) and remove the 20% foreign investment cap in PSBs. The amendments are needed to allow the privatization of PSBs.

Queries sent to the spokesperson for the finance ministry and the secretary of financial services remained unanswered till the time of going to press. However, a finance ministry official said that privatization of PSB is not on the table for now.