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PSU banks eye stake sale

business Updated: May 24, 2009 21:12 IST
Mahua Venkatesh
Mahua Venkatesh
Hindustan Times
PSU banks eye stake sale

With the new UPA government not needing the Left support and the stock markets showing an upward swing, the hitherto aborted disinvestment policy of the government may get a boost especially in the wake of a rising fiscal deficit following the announcement of three stimulus packages. This is setting the stage for sale of stakes by state-owned banks.

Several public sector banks like Punjab and Sind Bank, Central Bank and UCO Bank have been waiting for the markets to shine to garner more revenue. PSU banks, which are under pressure to increase their lendings in the wake of the economic slowdown, would require added capital.

“We will soon start looking at disinvestments, now that the stock market is also on an upward move,” a government official said. Earlier, due to stiff opposition from the Left parties, the Manmohan Singh government had kept the disinvestment policy on the backburner.

The government had indicated that disinvestment of PSUs would be taken up once the volatility in the stock market eased.
“The policy may be get a push now that the UPA has got a majority and there will be little opposition on the issue from the allies,” the official added.

The Delhi-based Punjab and Sind Bank, which is 100 per cent owned by the government has already indicated that the option would be looked into. The government holds 80.20 per cent stake in Central Bank of India and 75.98 per cent in UCO Bank.

According to a source, these two banks would launch their public offers as they have sufficient
headroom to divest.

The government holding in public sector banks can come down to 51 per cent, as per present regulations.

The government wants the banks to be well capitalised, especially as they have been directed to increase lending to sustain the economic growth amid global slowdown.