Bank of India, Central Bank of India, Indian Overseas Bank, and Bank of Maharashtra rally by over 19% on hopes of privatisation
- Public sector banking stocks are running in the green with Bank of Maharashtra leading the rally.
- This jump in stock prices comes after a report by Reuters revealed that Bank of Maharashtra, Indian Overseas Bank, Bank of India and Central Bank of India have been shortlisted for privatisation.
- However, banking unions are not happy about the move and plan to go on a two-day strike in March.
While the government has not commented on this development, the four shortlisted banks are leading the rally in public sector banking stocks.
As markets closed for the day, Bank of India’s share price was up by a massive 19.81% followed by Bank of Maharashtra's stock jumping 19.81%.
Source: NSE as of 12:15 pm
|Bank||Share price gains on Feb 16|
|Bank of Maharashtra||19.81%|
|Indian Overseas Bank||19.63%|
|Central Bank of India||19.71%|
|Bank of India||19.97%|
The Modi administration is pushing to sell assets in order to shore up government revenue after massive public expenditure during the COVID-19 pandemic.
But, banking unions in the country aren’t on board with the plan to sell public sector assets to private players — especially, within the banking industry.
Two-day bank strike scheduled for March
The All India Bank Officers’ Confederation has called for protests starting February 19, which will culminate into a two-day strike in March.
Bank strike schedule:
Source: Strike notice
|February 19||Day-long protest in all state capitals|
|February 20 - March 10||Relay protests in all states, districts and towns|
|March 15 - 16||Two-day strike|
“The Government’s announcement to privatise our public sector banks is totally unfortunate and unwarranted. The need of the hour is to strengthen public sector Banks” said the strike notice.
Source: Bank union estimates
|Bank of India||50,000|
|Central Bank of India||33,000|
|Indian Overseas Bank||26,000|
|Bank of Maharashtra||13,000|
The plan for privatising India’s banks
For now, it’s only mid-sized and small banks which have been put up on the chopping block. Going forward, some of the bigger banks might also be put up for sale to the private sector, according to Reuters.
AdvertisementIndia now has 12 public sector banks, down from 27 in 2017. Even so, they collectively contribute to around 60% of banking in the market.
The State Bank of India (SBI) is the only bank that will be spared from this pruning exercise. The government justifies that SBI is a ‘strategic bank’ — responsible for implementing public sector initiatives like expanding rural credit.
The banking unions argue that the same argument can also be made for other public sector banks. According to them, chemes like Jan Dhan Yojana and MUDRA have been successful because of public sector banks and their rigorous implementation.
Even during the pandemic, the unions believed that they were integral in implementing measures that support the government’s impetus to provide liquidity and fiscal stimulus. “Privatising them means handing over the people’s money to private hands with vested interest,” the unions said during the post-budget reaction.
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