Bank of Maharashtra, Central Bank to go private way

New Delhi: NITI Aayog has submitted the names of two Public Sector Banks (PSBs) and one public sector general insurer, which can be sold off under the government's new privatisation policy, to the core group of Secretaries on Disinvestment. Sources said that the Department of Investment and Public Asset Management (DIPAM), and the Department of Financial Services (DFS) will examine the names suggested by NITI Aayog and finalise the list of possible candidates in the financial sector for privatisation this year.

People in the know also said that Bank of Maharashtra and Central Bank are the top two candidates that has been favoured for privatisation, though the Indian Overseas Bank has also found favour for the exercise either this year or possibly later.

Further, according to sources, United India Insurance may be chosen candidate for privatisation among the three general insurers, given its relative better solvency ratio. However, financial sector experts also contend that Oriental Insurance, with the least solvency ratio among the three, may be favoured as it does not have overseas operations and inviting a private investor may be easier for it. The government had earlier indicated that banks under prompt corrective action (PCA) framework or weaker banks would be kept out of privatisation as it would be difficult to find buyers for them. This would have left three PSBs - Indian Overseas Bank, Central Bank and UCO Bank out of the government's disinvestment plan.

But they could be brought out of PCA as there are visible signs of improvement in some of the key parameters such as profitability and asset quality (in net NPA terms as they have stepped up provisioning) in the last 3-4 quarters. This could allow them to be considered for privatisation.