IOB, Central Bank of India clarify on privatisation reports

Amid privatisation buzz, Indian Overseas Bank (IOB) and Central Bank of India (CBI) informed the exchanges that no information had been conveyed on those lines to both public sector banks.

Shares of two state-owned banks, IOB and CBI, rallied up to 20 per cent on the BSE in Wednesday's intra-day trade on back of heavy volumes amid reports that the two financial institutions might be privatised. The Centre has shortlisted CBI and IOB for divestment, according to a report by a TV channel.

Centre, in its Union Budget for FY22, had announced broader divestment goals for the current fiscal. In that, it included privatisation of several other non-financial state-owned entities and listing of the wholly owned Life Insurance Corporation of India.

In September, Reserve Bank of India (RBI) had removed Prompt Corrective Action (PCA) restrictions on both IOB and CBI banks.

Furthermore, the government is going to introduce the Banking Laws (Amendment) Bill 2021 in the upcoming Winter Session of Parliament to enable the privatisation of two public sector banks (PSBs) as part of its Rs 1.75 lakh crore disinvestment target in the current fiscal year.

The legislation is among the 26 bills that are scheduled to be introduced during the session.

The bill seeks "to effect amendments in Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980 and incidental amendments to Banking Regulation Act, 1949 in the context of the Union Budget announcement 2021 regarding privatisation of two Public Sector Banks."