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

"The details are being worked out. I have made the announcement but we are working together with the RBI," she said, when asked about the proposal.

Mumbai: Finance Minister Nirmala Sitharaman on Sunday said the government will work with the Reserve Bank for execution of the bank privatisation plan announced in the budget.
Speaking to reporters, Sitharaman also said that the government has no plan to form any bank investment company to house the government stakes in banks.

In the union budget presented last week, Sitharaman had announced 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 said, when asked about the proposal.

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She, however, declined to comment on any specific details about which will be the candidate chosen for privatisation. “We will let you know when the government is ready to announce,” she said.

On the bad bank, Sitharaman said the  government may have to give some guarantee for the National Asset Reconstruction Company (ARC), but stressed that this is a solution which has come from the banks itself and will also be led by them.

She alleged that the banks’ non-performing assets, which are to be transferred into the National ARC, are a legacy of the mismanagement in the past.

On the Bank Investment Company (BIC), she said no such proposal is on the table and wondered what resulted in the discussion.  “There is no such discussion. I don’t know where it is coming from. At least it is not before me. I am not discussing that,” she said.

The minister also said that the banks are gradually getting out of the risk aversion, which had set in during the early days of the pandemic.

Sitharaman exuded confidence of hitting estimates of Rs 1.75 lakh crore divestment.  She said the government stands to get up to Rs 30,000 crore from the newly introduced agricultural infrastructure cess. On the issue of fuel prices, and inflation there in because of the duties, Sitharaman said if the Centre lowers excise, states will increase their taxes to keep the prices at the same level and also earn some revenues.

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