Two state-owned banks selected by the government for privatisation are likely to come out with an attractive voluntary retirement scheme (VRS) to get rid of extra flab, sources told PTI.
Finance Minister Nirmala Sitharaman
during Budget 2021-22 had announced that the government proposed to take up privatisation of two public sector banks (PSBs
) and one general insurance company.
An attractive VRS will make them fit for takeover by the private sector that is keen to enter the banking space, the sources said.
VRS is an option for those who would like to take an early retirement with a good financial package, not a forced exit, they added. It has also been done before the consolidation of some PSBs in the past.
The NITI Aayog has recommended names to a high-level panel headed by Cabinet Secretary Rajiv Gauba. The government think tank is responsible for identifying suitable candidates for privatisation.
Central Bank of India, Indian Overseas Bank, Bank of Maharashtra and Bank of India are some of the PSBs that may be considered for privatisation by the core group.
The other members of the high-level panel are Economic Affairs Secretary, Revenue Secretary, Expenditure Secretary, Corporate Affairs Secretary, Secretary Legal Affairs, Secretary Department of Public Enterprises, Secretary Department of Investment and Public Asset Management (DIPAM) and the Secretary of administrative department.
Following clearance from the Core Group of Secretaries, the finalised names will go to the Alternative Mechanism (AM) for its approval and eventually to the Cabinet headed by PM Modi for the final nod. RBI is also in discussion with the government over the privatisation of PSBs.
The government has budgeted Rs 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 Rs 2.10 lakh crore to be raised from CPSE disinvestment in the last fiscal.
While bank unions opposed privatisation of banks by going on a two-day strike in March under the banner of United Forum of Bank Unions, they also took to social media to register their protest against privatisation calling it a retrograde move.
PSBs have sanctioned 95% of the total loans under the PM SVANidhi scheme, which looks to provide street vendors loans of up to Rs 10,000 to restart business post the COVID-induced lockdown of last year.
(With inputs from PTI)