Modi govt's privatisation drive back: Unmerged PSBs, insurance cos to be put on the block

New Delhi: The Narendra Modi government will once again push the pedal on the privatisation of Public Sector Companies after Covid-19 threw its mega privatisation plan out of gear. Sources tell ET Now that besides pushing privatisation in oil behemoth BPCL and state-run rail hauler Concor, India plans to privatise at least four unmerged banks and insurance companies as a part of its next privatization push.

“The draft cabinet note for identifying strategic and non-strategic sectors has been sent for inter-ministerial consultations. A broader policy will look at sectors that have market imperfections due to the government’s presence, where the private sector can take the lead and ensure that the monopoly should not happen due to state-run companies. Sectors like banks, insurance, space, defence will be privatized,” a government source said.

ET Now learns that Punjab & Sind Bank, IOB, Bank of Maharashtra could be privatized along with state-run insurers such as National Insurance Company, United India Insurance and Oriental Insurance Company. The move comes after the government put the merger process of insurance companies on hold and aimed to focus on growth while infusing Rs 12,450 crore to improve their financial health.

The stake sale process for IDBI bank has also kickstarted. The government remains hopeful that IDBI Bank will soon exit RBIs Prompt Corrective Action framework after it showed improvement on many parameters in the March quarter. The lender reported a profit after 13 straight quarters of net losses in Q4 FY20.  Meanwhile, the privatisation of BPCL and Concor will be key to meeting the mammoth Rs 2.1 lakh crore divestment target for FY21. Department of Investment and Public Asset Management (DIPAM) is hopeful that global players like Aramco, Petronas will be interested in BPCL post Covid-19 as well.

"We are looking to hold virtual roadshows for Shipping Corporation in August. By September, we aim to release the Expression of Interest for Concor,” the source added. 

The government’s privatization push will be critical to meet its need for funds at a time when revenues on tax and non-tax front are hit due to Covid-19.

Source: Times Now News