Union Budget 2024: Government may push for increased privatisation of PSU banks

Govt may amend multiple banking laws to increase privatisation of PSU banks during the Union Budget 2024 session.

Published on: Jul 13, 2024, 12:17:10 IST

By HT News Desk | Edited by Abhyjith K. Ashokan

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The government may bring new amendments to the Banking Regulation Act as well as some other laws during the Union Budget 2024 session which can lead to the government's shareholding in public sector banks (PSBs) dipping below 51%, PTI wrote, citing anonymous sources.

In April 2020, the government consolidated 10 PSBs into four, reducing the total number of PSBs to 12 from 27 in March 2017. (Reuters)

What are the bank laws that may be amended?

Amendments in other acts such as the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 may also happen because amendments are needed to increase privatisation, as these are the same laws that led to nationalisation in the past.

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The government had earlier proposed amendments to these laws for the 2021 winter session, with Finance Minister Nirmala Sitharaman announcing the privatisation of public sector banks while presenting the Union Budget 2021, but these could not go through.

"Other than IDBI Bank, we propose to take up the privatisation of two PSBs and one general insurance company in 2021-22," she said.

In April 2020, the government consolidated 10 PSBs into four, reducing the total number of PSBs to 12 from 27 in March 2017.

What were some of India's bank mergers of the past?

The United Bank of India and Oriental Bank of Commerce were merged with Punjab National Bank, making the new entity, India's second-largest PSB.

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Syndicate Bank was merged with Canara Bank, Allahabad Bank with Indian Bank, and Andhra Bank and Corporation Bank were merged with the Union Bank of India.

Bank of Baroda merged Vijaya Bank and Dena Bank with itself in 2019.

SBI merged five of its associate banks, including State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Hyderabad, and also Bharatiya Mahila Bank. This was in April 2017.

The Union Budget 2024 will be presented on July 23, with the parliamentary session going on from July 22 to the passage of the Finance Bill on August 12.

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HT News Desk
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