Integration or privatization of banks have not yet been discussed: Secretary of DFS

Integration or privatization of banks have not yet been discussed: Secretary of DFS

Integration or privatization of banks have not yet been discussed: Secretary of DFS

According to the DFS Secretary, because smaller banks are doing well too, there is currently no instance of bank consolidation.

Two public sector banks were to be privatized, according to the Budget 2021–2022 announcement.

Secretary of the Department of Financial Services (DFS), Vivek Joshi, said that even smaller banks are doing well and that general elections are coming up. He also stated that there is no proposal being discussed in the government about the next stage of consolidation among PSU lenders or the privatization of two public sector banks.

Nothing about bank privatization is happening at the moment. A formal proposal does not exist. The amendment's draft will be ready in no time at all. We will take care of this when the time is right. In an interview with Moneycontrol, Joshi said, "It is a call that will be taken only when it is called for."

It is necessary to first change the Banking Companies (Acquisition and Transfer of Undertakings) Act of 1970 and 1980 as well as the Banking Regulation Act, which was of 1949 in order to make the privatization of the two public sector banks that were announced in Budget 2021–2022 possible.

It has to do with creating value and money. Thus, the government will monitor the market regardless of the decision-making level. And there will be elections here soon. The way things are laid out might alter even if the same administration returns.

The most recent bank consolidation occurred in 2020 with the merger of Syndicate Bank into Canara Bank, Andhra Bank as well as Corporation Bank into Union Bank of India, as well as Oriental Bank of Commerce as well as United Bank of India into Punjab National Bank. and Indian Bank and Allahabad Bank amalgamated.

According to the DFS Secretary, because smaller banks are doing well too, there is currently no instance of bank consolidation. "Many banks were subject to immediate remedial action when bank consolidation was completed early. He was subjected to a variety of constraints. This is no longer the case. In fact, smaller banks, such as Indian Overseas Bank and Bank of Maharashtra, are doing better these days. Who are going to be the merger candidates? This will be in addition to the Indian Central Bank. However, they are doing okay at the moment, he said.

Aside from State Bank of India, notable public sector enterprises include Bank of Baroda, Canara Bank, and Punjab National Bank. Two of India's largest private sector banks worldwide are HDFC Bank and ICICI Bank.

The government has given the banking industry favorable conditions, which has improved the performance of PSU banks. In FY24, banks generated unprecedented profits and distributed Rs 13,000 crore in dividends.

He said that as banks are now able to obtain capital on their own from the market, capital needs to be placed in the banks. "There is unquestionably no capital investment in banks. Through qualified institutional placement (QIP), they independently obtain funds," said Joshi.

According to him, several PSU banks do not hold the required minimum of 25 percent of the shares in the public market. As a result, the government plans to get another waiver from SEBI after August 2025.

Insurance PSU privatization

Along with the previous budget announcement, a public insurance firm is also in the process of being privatized. "A change to the law has been made. We've finished and sent in our assignment. Deepam is now in the driver's seat. They need to decide which business to privatization. Naturally, DFS will be present when the interministerial committee is established, he said.