The plan was to make the privatization of banks attractive and to invite bids so that the central government would not interfere in the operations of banks. For this, steps will be taken to change the rules of the Reserve Bank. The government will not interfere in the operations of the banks that will be privatized. It will move away from banking transactions. Then there will be only transactions between banks and customers.
The source said that an exchange of views was currently underway between the Prime Minister’s Office, the Finance Ministry and the Reserve Bank. In particular, there was a debate on the extent of government participation in which bank. The government was also in talks with economists on the issue.
There are currently dozens of banks. The government wants to privatize half of these banks. Perhaps more banks could also be privatized. As of 2017, there were 27 small and large banks in the country. There have been twelve banks at present. So far the government has merged some of the banks into big banks. The Policy Commission recommended to the government that you have control over a maximum of four banks.
As per the directions received now, the four banks that the government wants to continue its partnership with in the future include State Bank of India, Punjab National Bank, Bank of Baroda and Canara Bank. It could also mean that the government will lose its stake in the remaining banks and these banks will be completely privatized. The policy commission had advised privatization of three small state-owned banks, Punjab and Sind Bank, Bank of Maharashtra and UCO Bank, on a priority basis.