Indian Overseas Bank, which has a market capitalisation of aboutRs 40,000 crore and Central Bank, which has a market capitalisation of about Rs20,000 crore are being considered for privatisation.
Both the banks are publicly listed i.e. they are traded onNSE (National Stock Exchange) and BSE (Bombay Stock Exchange).
Privatisation in this context means that the governmentswill sell their stake in these companies.
The Government of India owns about 96% of the company IndianOverseas Bank and about 90% of the company Central Bank. The former is worth aboutRs 39,000 crore and the latter is worth about Rs 18,500 crore.
Indian government’s think tank NITI Aayog recommended thesetwo companies in the privatisation drive. Now, these are being evaluated by thedisinvestment and financial services departments. Finally, the Union Cabinetwill evaluate and decide. Not to forget, the approval of the Reserve Bank ofIndia will be required too.
An exercise like this is a multi-stage process and thus dueprocess will be followed.
It must be noted that to bring this recommendation tofruition will require certain changes in the legislation to enable thestate-run banks to become privatised. This too will have a bearing on the timelineof privatisation if it comes to fore.
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With disinvestment, the government aims to raise cash aswell as improve the functioning of the companies by bringing in privateownership.