The government may introduce new amendments to the Banking Regulation Act and other laws during the Union Budget 2024 session, potentially reducing the government’s shareholding in public sector banks (PSBs) to below 51%, PTI reported, citing anonymous sources.
Which bank laws may be amended?
Amendments may also be made to the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980. These amendments are necessary to facilitate increased privatization, as these are the laws that led to the nationalization of banks in the past.
Previously, the government proposed amendments to these laws for the 2021 winter session. Finance Minister Nirmala Sitharaman announced the privatization of public sector banks while presenting the Union Budget 2021, but these amendments did not pass.
“We propose to take up the privatization of two PSBs and one general insurance company in 2021-22,” she said, in addition to the privatization of IDBI Bank.
In April 2020, the government consolidated 10 PSBs into four, reducing the total number of PSBs from 27 in March 2017 to 12.
What were some of India’s bank mergers in the past?
- United Bank of India and Oriental Bank of Commerce were merged with Punjab National Bank, creating India’s second-largest PSB.
- Syndicate Bank was merged with Canara Bank, Allahabad Bank with Indian Bank, and Andhra Bank and Corporation Bank were merged with Union Bank of India.
- Bank of Baroda merged Vijaya Bank and Dena Bank with itself in 2019.
- SBI merged five of its associate banks—State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Hyderabad—and Bharatiya Mahila Bank in April 2017.
The Union Budget 2024 will be presented on July 23, with the parliamentary session running from July 22 to the passage of the Finance Bill on August 12.