There are preparations to bring down the number of public sector banks from 12 to 5, Reuters reported on Tuesday.
Sources in the government and banking sector told the news agency that the first step in the direction can be taken if the government sells its stake in Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra, and Punjab and Sindh Bank.
While the Ministry of Finance has not issued an official statement regarding the same, government sources said that the Centre is of the ‘view that there should be only 4-5 government banks’ and that a new proposal was being made regarding privatisation of banks.
Last year, the government merged 10 state-run banks into four large banks. An official said that now the government is preparing to sell the stake of banks which have not been merged.
The plan to privatise banks comes at a time when the NPA of banks is expected to increase due to ongoing COVID-19 pandemic. The economy is at a standstill due to the current crisis, which is expected to double the non-performing assets NPAs of banks.