Recently, the Finance secretary said that the government is in the process of taking ‘advanced action’ of  Advance Bank Privatization.

They’ll take forward the Advance Bank Privatization of public sector banks, top finance ministry officials asserted.

Key Details:

  • In the Union Budget for 2021-22, Union Finance Minister had announced the privatization of two PSBs besides IDBI Bank. However, this year’s Budget Speech had skipped the mention of the progress made for the privatization of two PSBs.
  • Even as the NITI Aayog has suggested names of two PSBs for privatization.
  • The Centre is yet to make an enabling provision.
  • They were provising In the law for the divestment of the government’s stake sale below the 51 percent threshold.
  • The government had to Write down the introduction of the Banking Companies (Acquisition and Transfer of Undertakings)
  • The Act of 1970, in the Winter Season, but theBills were not put forward to the Ministers.
  • The Aayog had reportedly suggested privatization of the Central Bank of India and the Indian Overseas Bank.
  • According to the amendments to the Banking Companies Act moved last year,
  • The government is looking to retain at least 26 percent stake in PSBs post-privatization.


  • The approval to privatize the two PSBs is yet to be thought about by the Core Group of Secretaries on Divestment (CGD) make for by the cabinet secretary.
  • Once accept by the CGD, the proposal will be sent to the Alternative Mechanism (AM) which comprises,
  • And the Union Finance Minister Sitharaman and Union Minister of Roads Nitin Gadkari.
  • After the nod, the Cabinet will take up the proposal.


NITI AAYOG was endow by the government with the responsibility of strategic disinvestment.

Strategic Disinvestment
  • Disinvestment means the dilution of the stake of the Government in a public enterprise.
  • Strategic disinvestment is transferring the ownership and control of a public sector entity to some other entity (mostly to a private sector entity).
  • Unlike simple disinvestment, strategic sale implies some sort of privatization.
  • According to the government, strategic disinvestment would imply the sale of a substantial portion of the Government shareholding of a central public sector enterprise (CPSE) of up to 50%, or such a higher percentage as the competent authority may determine, along with the transfer of management of control.
  • Strategic disinvestment in India has been leading the way by the basic economic principle that the government should not be in the business to engage itself in manufacturing/producing goods and services in sectors where competitive markets have come of age, and the economic potential of such entities may be better locate in the hands of the strategic investors due to various factors, e.g. infusion of capital, technology up-gradation and efficient management practices, etc.
NITI Aayog
  • The National Institution for Transforming India, also said NITI Aayog, was formed via a resolution of the Union Cabinet on 1st January 2015.
  • The Government of India constituted the NITI Aayog to replace the Planning Commission instituted in 1950.
  • It is the premier policy ‘Think Tank’ of the Government of India, providing both directional and policy inputs.
  • While designing strategic and long-term policies and programs for the Government of India, NITI Aayog also provides relevant technical advice to the Centre and States.
  • The Governing Council of NITI, with the Prime Minister as its Chairman, comprises the Chief Ministers of all States and Lt. Governors of Union Territories (UTs).


Source: The Hindu

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