Shares of Central Bank of India and Indian Overseas Bank rallied on Monday after reports said that the government may divest its stake in these lenders as part of its privatisation initiative.
The share price of Central Bank of India jumped over 14 percent, while that of Indian Overseas Bank rose over 11 percent.
Government think tank NITI Aayog has recommended these two banks for disinvestment, a report by The Times of India mentioned, citing sources. It added that Bank of India (BoI) may also be a potential candidate for sale.
According to the report, the NITI Aayog proposal is being examined by the disinvestment and financial services departments.
While NITI Aayog has been tasked with recommending the names, the recommendations will be reviewed by the inter-ministerial group of officers and subsequently by a group of ministers, before the Union Cabinet gives its seal of approval, the report said.
Officials of the department of investment and public asset management (Dipam) told the newspaper that it would examine the proposal with the department of financial services and discuss the legislative changes needed for the privatisation of the state-run banks.
“The timeline will depend on the legislative changes required,” the sources told TOI.
Also, the matter will have to be discussed in detail with RBI as the law and regulations provide a special dispensation for state-run entities in several areas.
At 1:40 pm, the shares of Central Bank of India were trading 11.74 percent higher at Rs 23.80 apiece, while IOB shares were trading at Rs 21.60, up 12.21 percent on the BSE.