Government is reportedly planning to privatise Indian Overseas Bank and Central Bank of India — stocks jump up to 20%

• The government may introduce Banking Laws (Amendment) Bill 2021 in the Winter Session of Parliament, commencing from 29 November, in order to privatise two public sector banks.
• The bill is reportedly among the 26 bills, which are to be introduced during the session.
• While RBI had removed Indian Overseas Bank from its watchlist i.e., prompt corrective action, Central Bank of India is still under the framework.

In line with the government’s divestment plan of ₹1.75 lakh crore for FY22, there are reports of the government introducing a banking amendment bill in upcoming Winter Session of Parliament to privatise two state owned banks.

CNBC TV-18 reported that the government has shortlisted Indian Overseas Bank and Central Bank of India for divestment. With this, the two banks might witness sale of 51% stake in the first phase of divestment.

The news triggered shares of both the banks as they spiked up to 20% in Wednesday’s trade. At 12:07 p.m., shares of Central Bank were up 10% while those of Indian Overseas Bank were up 11%.

In September 2021, Reserve Bank of India (RBI) had removed Indian Overseas Bank from its watchlist i.e., prompt corrective action (PCA) after an improvement in the lender’s asset quality.

The PCA is a framework under which lenders with struggling financial indicators are placed under watch by RBI. Meanwhile, the Central Bank of India is still under the framework.

Plan to privatise some banks was announced in the Union budget for 2021-22 as a part of the government’s broader divestment goals for FY22.

The bill will be reportedly among the 26 bills, which are scheduled to be introduced during the session.

Among other bills in discussion, India’s cryptocurrency bill is the most awaited during the Winter Session of Parliament, which will run from November 29 to December 23.

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Besides crypto, these are the major bills that will be introduced in the winter session of the Parliament