Govt to work with RBI for execution of bank privatisation plan: FM Sitharaman

Talking to reporters in the financial capital, Sitharaman additionally stated that the government has no plan to form any bank investment company to house the government stakes in banks.

In the union budget introduced last week, Sitharaman had introduced the privatisation of two banks as part of its disinvestment plan. Bank unions have opposed the move. “The details are being worked out. I have made the announcement but we are working together with the RBI,” she stated, when asked in regards to the proposal.

She, however, declined to comment on any particular details about which would be the candidate chosen for privatisation. “We will let when the government is ready to announce,” she answered when asked about the details. On the bad bank, Sitharaman stated the government might have to provide some guarantee for the National Asset Reconstruction Company (ARC), however stressed that this is a solution which has come from the banks itself and also will be led by them. Sitharaman alleged that the banks’ non-performing assets, that are to be transferred into the National ARC, are a legacy of the mismanagement in the past.

There is no “phone banking” happening now, with favours being sought for anyone from New Delhi. On the Bank Investment Company (BIC), she stated no such proposal is on the table and wondered what resulted in the discussion. “There is no such dialogue. I don’t know where it is coming from. At least it’s not before me. I am not discussing that,” she stated. She stated that there’s a need for professionalisation of banks and the government is attempting to make sure the same. The minister also stated that the banks are gradually getting out of the risk aversion, which had set in during the early days of the pandemic.

When asked about the ambitious divestment targets and the government’s potential to push by essential reforms to earn the projected revenues, Sitharaman exuded confidence of hitting budgetary estimates of ₹1.75 lakh crore divestment. Sitharaman stated the government stands to get up to ₹30,000 crore from the newly introduced agricultural infrastructure cess. On the problem of fuel prices, and inflation there in due to the duties, Sitharaman stated if the Centre lowers excise, states will increase their taxes to maintain the prices at the same level and also earn some revenues.