The Central government has shortlisted the Central Bank of India (CBI) and the Indian Overseas Bank (IOB) for divestment, according to a report on Monday.

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The government is likely to amend the Banking Regulations Act and Banking Law Act during the monsoon session of Parliament to privatise the two-state run banks, the report suggests.

The move comes after Union Finance Minister Nirmala Sitharaman had announced during her Budget 2021 speech in February that two public sector banks (PSBs) would be privatised in 2021-22.

According to the CNBC Awaaz report, the Central Bank of India and the Indian Overseas Bank might see 51 percent sale in the first phase of disinvestment.

NITI Aayog recently submitted a report to the core group of secretaries on disinvestment mentioning the names of these two banks. The government think tank is responsible for suggesting names of PSUs in strategic sectors to be merged, privatised, or made subsidiaries of other PSUs.

Once the names get a nod from the core group of secretaries, headed by the Cabinet Secretary Rajiv Gauba, the report will go to an alternative mechanism (AM) for its approval and eventually to the Cabinet headed by the Prime Minister for the final approval.

Earlier this month, a PTI report citing sources said, the two state-owned banks being picked up for privatisation by the government are likely to come out with an attractive voluntary retirement scheme (VRS) to get rid of the extra flab.

An attractive VRS will make them lean and fit for takeover by the private sector entities that are keen to enter the banking space, the sources said.

Changes on the regulatory side to facilitate privatisation would start after the Cabinet approves the names.

Meanwhile, banking sector regulator Reserve Bank of India (RBI) also said it is in discussion with the government over the privatisation of PSBs.

The government has budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions during the current financial year.

(With text inputs from PTI)

(Edited by : Kanishka Sarkar)

First Published:Jun 21, 2021 6:00 PM IST