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Shares of Central Bank of India, Indian Overseas Bank zoom 20% over divestment report
Central Bank of India, Indian Overseas Bank, Bank of Maharashtra and Bank of India are some of the names that may be considered for privatisation.
Shares of the Central Bank of India and Indian Overseas Bank surged 20 per cent and hit their upper circuits in intraday trade on BSE on Monday amid reports that the Centre has shortlisted them for divestment. According to a report by television channel CNBC Awaaz, the two state-owned lenders might see 51 per cent sale in the first phase of disinvestment.
Shares of Central Bank were locked in upper circuit at ₹24.30 on the back of over two-fold jump in trading volumes. Shares of Indian Overseas Bank hit a 52-week high of ₹23.60 on NSE.
Finance minister Nirmala Sitharaman announced during her Budget 2021-22 speech on February 1 that the government proposed to take up the privatisation of two public sector banks (PSBs) and one general insurance company.
Earlier this month, news agency PTI reported citing people familiar with the matter that the two state-owned banks being picked for privatisation by the government are likely to come out with an attractive voluntary retirement scheme (VRS) to get rid of the extra flab. The people PTI cited said that an attractive VRS will make them lean and fit for takeover by the private sector entities that are keen to enter the banking space.
The NITI Aayog, which has been entrusted with the job of identifying suitable candidates for the privatisation, has recommended names to a high-level panel headed by cabinet secretary Rajiv Gauba. Central Bank of India, Indian Overseas Bank, Bank of Maharashtra and Bank of India are some of the names that may be considered for privatisation by the Core Group of Secretaries on Disinvestment.
After the Core Group of Secretaries clear the names, the finalised one will go to the Alternative Mechanism (AM) for its approval and eventually to the cabinet headed by Prime Minister Narendra Modi for the final nod. After the cabinet approval, a process on the changes on the regulatory side to facilitate privatisation would start. The Reserve Bank of India (RBI) also said it is in discussion with the government over the privatisation of PSBs.
The government has budgeted ₹1.75 lakh crore from stake sale in public sector companies and financial institutions during the current financial year. The amount is lower than the record budgeted ₹2.10 lakh crore to be raised from CPSE disinvestment in the last fiscal.
Meanwhile, domestic markets erased their morning losses and were trading in the green in the afternoon deals of Monday's volatile session. The BSE hovered around 52,500 levels or up 150 points after falling to as low as 51,740 levels in intra-day deals. The Nifty50 index was above the 15,700-mark.
(With PTI inputs)
