Privatisation buzz lifts PSU bank shares!

Last updated: 17 Feb, 2021 | 11:43 am

Privatisation buzz lifts PSU bank shares!
  • PSU bank shares including Bank of Maharashtra, Bank of India, Indian Overseas Bank and the Central Bank of India extended gains on Wednesday, buoyed by media buzz around their privatization. 
  • Bank of Maharashtra, Indian Overseas Bank and Central Bank of India closed 20% higher on Wednesday. In the past two days, shares of these banks have risen over 40 percent each.

Privatization buzz

  • According to a Reuters report, the government has these four mid-sized PSU banks for privatisation. The government has raised less than Rs 20,000 crore so far in FY21 through stake sale, out of the targeted Rs 1.75 lakh crore.
  • Two of these banks will be selected for sale in FY22, Reuters reported citing sources.
  • Separately, the government is also likely to bring amendments to two legislations later this year, in order to facilitate privatisation. 

While there is media buzz around these four banks, the government has not yet made any official announcement. In Union Budget, the government had said that it will be privatising two Public Sector Banks and one General Insurance company in the year 2021-22, apart from IDBI Bank. The overall reaction is positive, as privatisation of PSBs may help the banks to become more efficient in the long-run. The new acquirer is likely to run the bank more efficiently with enhanced capital infusion.

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