The government could allocate a major chunk of the revised estimate ₹15,000 crores for bank capitalization allotment for 2021-22 to banks identified for privatization, as it is certain of pushing ahead on its privatization plans second quarter of 2022-23, peoples aware of the matter said.
The technique is to strengthen the balance sheet of these lenders to create a potential investor premium, a government official said.
Finance minister Nirmala Sitharaman had declared privatization of two public sector banks as a part of the disinvestment program for this financial year. Niti Aayog had purportedly shortlisted Central Bank of India and Indian Overseas Bank for the reason. Notwithstanding, a final decision on the candidates is yet to be taken.
The government has slashed the allotment for bank capitalization for the current monetary by ₹5,000 crores to ₹15,000 crores in the revised estimates. Further, it has made no provisions for bank capitalization in the budget for 2022-23.
“Most state-run lenders have plans to raise capital on their own strength, so there is no pressing need for meeting regulatory requirements or growth capital,” said the authority cited above.
Central Bank is the only lender remaining under the Reserve Bank of India’s prompt corrective action (PCA) framework.