Cabinet committee on privatisation yet to take decision on two banks: FM

Finance Minister Nirmala Sitharaman on Monday said the cabinet committee on privatisation is yet to take a decision with regard to divesting two public sector banks.

The government had in Budget 2021-22 announced its intent to take up privatisation of two public sector banks (PSBs) during the year and approval of a policy of strategic disinvestment of public sector enterprises, she said in the Lok Sabha.

“Consideration of various issues related to disinvestment, which inter alia, include selection of the bank(s) is entrusted to the Cabinet committee designated for this purpose. Decision by the Cabinet committee concerned for privatisation of PSBs has not been taken in this regard,” she said.

The government has budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including two PSBs and one insurance company, during the current financial year.

In another reply, she said the RBI last month cautioned members of public against some co-operative societies using the word ‘bank’ as part of their names and accepting deposits from non-members/associate members.

This is tantamount to conducting banking business without obtaining a banking licence from RBI, in violation of the provisions of the Banking Regulation Act, 1949.

In this regard, she said, the RBI had requested chief secretaries of all the states and Union Territories and the Central Registrar of Cooperative Societies to take necessary action against such unlicensed entities operating in their respective jurisdictions.

“RBI has informed that through the aforementioned press release, RBI is trying to safeguard and protect the interest of the public arising out of the wrong use of the word ‘bank’ by some co-operative societies which are not entitled to use that term,” Sitharaman said.

Use of the term ‘bank’ as part of the societies’ name results in a false impression among public that such co-operative societies are banks which are under the regulation and supervision of RBI and depositors are covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) protection, she said.

“Therefore, with a view to protect the members of public, RBI has cautioned that such societies have neither been issued any licence under BR Act, 1949 nor are they authorised by RBI for doing banking business and the insurance cover from DICGC is also not available for deposits placed with these societies,” she said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor