MUMBAI: Government has finalized the names of Central Bank of India and Indian Overseas Bank to be private. In these two, the government will sell its 51% stake in the first phase. Due to this news, the shares of both the banks have shown a jump of up to 20% today.
Bank shares jump 20%
The share of Central Bank of India is trading up 20% at Rs 24.30 while the share of Indian Overseas Bank is trading up 19.80% at Rs 23.60. Similarly, the share of Bank of Maharashtra is up 8% at Rs 27 while the share of Bank of India is trading up 7% at Rs 80.
Government will reform the Act
The government will reform the Banking Regulation Act to reduce the stake in these two banks and will also reform some other banking rules. The government has planned to reduce the stake in a total of 4 public sector banks. Apart from these two, there is also Bank of Maharashtra and Bank of India. However, in the first phase, the names of only two banks have come up. The government had also talked about privatization of two public sector banks in the budget.
A sharp jump was seen in the shares of both the banks when similar news surfaced 15 days ago. The shares of these banks have seen more than double jump in the last 2-3 months.
NITI Aayog had finalized the name
According to sources, the government’s think tank NITI Aayog had chosen the names of these two banks. However, Bank of India is still on the list of possible names. NITI Aayog has sent the names of these two public sector banks and a general insurance company to the Secretariat of the Committee on Disinvestment. All these will be made private by the end of this financial year.
Banks in the privatization of its customers onwhat the impact will be?
Whatever money the account holders have deposited in these 4 banks, there is no danger on it. Account holders will benefit that after privatization, they will be able to get banking services like deposits, loans in a better way than before. There will be a risk that in some cases they will have to charge more. For example, a minimum balance of Rs 1,000 is required to be maintained in the savings accounts of public sector banks. In some private banks, the minimum balance requirement increases to Rs 10,000. At present there are 12 public sector banks. After 4 of these become private, 8 government banks will be left.
Existing government bank These are – 1. Bank of Baroda 2. Bank 3. Bank of Maharashtra 4. Canara Bank 5. Central Bank of India 6. Indian Bank 7. Indian Overseas Bank 8. PNB 9. Punjab and Sindh Bank 10. Union Bank of India 11. UCO Bank 12. State Bank of India
Bank of Maharashtra , Central Bank of the stock 51% to get to see 6,400 million
At present it is not decided whether the government will sell its entire stake in both BOI and IOB. According to CARE’s analysis, if the government reduces its stake in both the banks to 51%, then it will bring Rs 12,800 crore to its coffers. If the government also reduces its stake in Bank of Maharashtra (BOM) and Central Bank of India (CBI) to 51%, then both will get around Rs 6,400 crore. The government’s stake is 95.8% in IOB, 92.5% in BOM, 92.4% in CBI and 89.1% in BOI.