The four banks on the shortlist are
, , and the Central Bank of India, two officials told Reuters on condition of anonymity as the matter is not yet public.
Following the development, shares of Bank of Maharashtra hit 20 per cent upper circuit limit at Rs 19.10 on BSE. At 9.50 am, shares of Bank of India were up 12 per cent at Rs 65.90. Indian Overseas Bank surged 16.36 per cent to Rs 12.80 while Central Bank added 13,13 per cent to Rs 15.77.
Privatisation of the banking sector, which is dominated by state-run behemoths with hundreds of thousands of employees, is politically risky because it could put jobs at risk but Prime Minister Narendra Modi’s administration aims to make a start with second-tier banks, Reuters reported.
Two of those banks will be selected for sale in the FY22 which begins in April, the officials told Reuters. The shortlist has not previously been reported.
The government is considering mid-sized to small banks for its first round of privatisation to test the waters. In the coming years it could also look at some of the country’s bigger banks, the officials said.
The government, however, will continue to hold a majority stake in India’s largest lender State Bank of India, which is seen as a ‘strategic bank’ for implementing initiatives such as expanding rural credit.
A finance ministry spokesman declined to comment on the matter, Reuters said.
