The Union Budget 2021-22 has announced the privatisation of two public sector banks (in addition to IDBI Bank) and one general insurance company in the upcoming fiscal.
It also announced a strategic sale/disinvestment policy for four strategic sectors — including banking, insurance, and financial services — in which it will have a “bare minimum presence”.
Strategic disinvestment would imply the sale of a substantial portion of the Government shareholding of a central public sector enterprise (CPSE) of upto 50%, or such higher percentage as the competent authority may determine, along with transfer of management control.
Why were private banks nationalised in the first place?
Impact Nationalisation had on PSBs
Current issues plaguing Public Sector Banks (PSBs)
Arguments in Favour
Privatisation of banks is not a remedy to all solutions. With steps like Privatisation of Banks, the Government should also focus on comprehensive governance reforms, resolution of NPAs and creating a free market so that investment can be reinvigorated and wheels of the economy can again get back on track.