Aiming to fulfill its agenda of privatising two public sector banks, the government is likely to table amendments in the Banking Regulation Act 1949 during the forthcoming Winter session of Parliament, according to highly placed sources.
Apart from this, amendments would be needed in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, for privatisation of banks, sources further said.
These too are likely to be tabled during the Winter session, they added.
These legislations had led to nationalisation of banks during the tenure of Indira Gandhi as prime minister and if the government wants to privatise public sector banks, then it will have to amend provisions in the above legislations.
The amendments are likely to bring down the government's stake in two public sector banks from the existing 51 per cent.
Government is however yet to identify the two banks which are to be privatised.
Finance Minister Nirmala Sitharaman had earlier said that the government plans to privatise at least two public sector banks.
The amendments will also allow a legal framework for privatisation and bring in corporate governance by reducing the number of government nominees in the banks which will be privatized, sources said.
In addition to this, fresh capital as well as foreign investment will also be infused in these public sector banks, sources pointed out.
The decision will send out a positive message to investors and ensure seamless and timely transition for these banks.
Privatisation of public sector banks will help the government meet its disinvestment targets and reduce expenditure towards infusion of capital in banks.
Ms Sitharaman in the Union Budget for 2021-22, had announced a major privatisation agenda, where privatisation of two public sector banks and one general insurance company was included.
Under its disinvestment plans, government has decided to go for a mega initial public offering (IPO) of Life Insurance Corporation of India (LIC) and residual stake sale in IDBI Bank during the current financial year.
The government has earmarked Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions during 2021-22.