The government is working on amendments to Banking Companies (Acquisition & Transfer) Act and Banking Regulation Act to facilitate the privatisation of public sector banks, said an official close to the development.
The official, speaking exclusively to CNBC-TV18, said that the government is expecting to introduce the amendments to these two acts that had paved the way to bank nationalisation decades ago during the Budget session.
According to the official, the disbursement of residual recap for PSBs is all set to take place this month itself after the government recap for PSBs was kept at Rs 20,000 crore for the upcoming fiscal year. Earlier, the government had infused Rs 5500 crore in PSBs out of Rs 20,000 crore recap in FY21. The government is hoping to raise up to Rs 60,000 crore in debt, equity by the end of this month and will encourage PSBs to tap markets for capital raising in the near future.
Further, it has also been assured that the Asset Reconstruction Company (ARC) for bad loans will become functional within the next two quarters. This could be possible without any hiccup given the fact that there is no need for any legislative or regulatory changes for setting up the institution, the official said.
Earlier, the government consolidated 10 public sector banks into four and as a result, the total number of PSBs came down to 12 from 27 in March 2017. As per the amalgamation plan, the United Bank of India and Oriental Bank of Commerce were merged with Punjab National Bank, making the proposed entity the second-largest PSB.
Syndicate Bank was merged with Canara Bank, while Allahabad Bank was subsumed in Indian Bank. Andhra Bank and Corporation Bank were amalgamated with Union Bank of India.
In a first three-way merger, Bank of Baroda merged Vijaya Bank and Dena Bank with itself in 2019. SBI had merged five of its associate banks - State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad- and also Bharatiya Mahila Bank effective April 2017.
(With agency inputs)