Banking Laws Amendment Bill, 2021 awaiting union cabinet's nod

The Banking Laws (Amendment) Bill, 2021, which facilitates privatisation of two public sector banks (PSBs) as part of the Rs 1.75 lakh crore disinvestment target in the current fiscal year, is awaiting union cabinet's approval, government officials privy to the developments told CNBC-TV18.

The bill is expected to bring down the minimum government holding in the PSBs from 51 percent to 26 percent, government officials in the know told CNBC-TV18. The legislation is one of the 26 bills that are scheduled to be introduced during the session

"To effect amendments in Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980 and incidental amendments to Banking Regulation Act, 1949 in the context of Union Budget announcement 2021 regarding privatisation of two Public Sector Banks," according to the list of legislative business for the Winter Session.

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While presenting Union Budget 2021-22 earlier this year, union finance minister Nirmala Sitharaman had announced the privatisation of PSBs as part of a disinvestment drive to garner Rs 1.75 lakh crore.

In the last concluded session, Parliament passed a bill to allow privatisation of state-run general insurance companies. The General Insurance Business (Nationalisation) Amendment Bill, 2021, removed the requirement of the central government to hold at least 51 percent of the equity capital in a specified insurer.

The Act, which came into force in 1972, provided for the acquisition and transfer of shares of Indian insurance companies and undertakings of other existing insurers in order to serve better the needs of the economy by securing the development of the general insurance business.

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Government think-tank NITI Aayog has already suggested two banks and one insurance company to Core Group of Secretaries on Disinvestment for privatisation. According to sources, the Central Bank of India and the Indian Overseas Bank are likely candidates for privatisation.