Menu

privitisation

Rbi cfo

RBI Clarifies On Recent Bulletin Article On Privatisation Of PSBs

, , ,

The article titled, “Privatisation of Public Sector Banks: An Alternate Perspective” published in the August 2022 issue of the RBI bulletin had noted that adopting a “big bang” approach to privatisation of PSBs would do more harm than good

The Reserve Bank of India (RBI) on Friday clarified on a recent bulletin article on privatisation of public sector banks.

The article titled, “Privatisation of Public Sector Banks: An Alternate Perspective” published in the August 2022 issue of the RBI bulletin had noted that adopting a “big bang” approach to privatisation of PSBs would do more harm than good.

“This is regarding reports in certain sections of the media stating that the RBI is against privatisation of Public Sector Banks (PSBs),” adding that that the paper is authored by researched of RBI.

Here’s what the RBI clarified on the issue:

i) It said views expressed in the article are those of the authors and do not represent the views of the Reserve Bank of India.

ii) The Press Release relating to the August 2022 Bulletin highlights that “the gradual approach to privatisation adopted by the government can ensure that a void is not created in fulfilling the social objective of financial inclusion”.

iii) The concluding paragraph of the article, inter-alia, mentions that:

– “From the conventional perspective that privatisation is a panacea for all ills, the economic thinking has come a long way to acknowledge that a more nuanced approach is required while pursuing it”;

– “Recent mega merger of PSBs has resulted in consolidation of the sector, creating stronger and more robust and competitive banks”;

– “A big bang approach of privatisation of these banks may do more harm than good. The government has already announced its intention to privatize two banks. Such a gradual approach would ensure that large scale privatisation does not create a void in fulfilling important social objectives of financial inclusion and monetary transmission.”

Thus, the researchers are of the view that instead of a big bang approach, a gradual approach as announced by the Government would result in better outcomes.

Coal

Coal India Will Not Have Luxury To Retain Loss-Making Mines: Official

, , , ,

Mining behemoth Coal India will not have luxury to retain its loss-making mines with its aim to remain competitive in the wake of privatisation of coal blocks, a senior government official said

Mining behemoth Coal India will not have luxury to retain its loss-making mines with its aim to remain competitive in the wake of privatisation of coal blocks, a senior government official said on Monday.

It is also expected that India will have a surplus of coal for thermal power plants by next year even though electricity demand grows by six per cent, he said.

Reforms will make the coal sector more vibrant for consumers of the dry fuel but there will be churn in mining activities. I think Coal India will not have the luxury to drag on loss-making mines and continue with financially inefficient mines, Coal Secretary A K Jain said while addressing a conference organised by Mjunction.

Last year, the Maharatna public sector undertaking had announced that it would close down 23 unviable mines, including open cast and underground blocks, as this would help the company save around Rs 500 crore, considering all costs.

The world’s largest coal miner shut down 82 mines in the last three-four years.

Underground mines are a major focus for closures as they are not remunerative. Around 158 such mines employ 43 per cent of the workforce but contribute only 5 per cent of the total production, a Coal India official had said earlier.

Jain also hoped that there will be a surplus of coal for thermal power generation units by the next year with an increase in the dry fuel production in the country from captive miners.

The captive sector is likely to produce 130 million tonne of coal next year.

Addressing the event, Coal India chairman and managing director Pramod Agrawal said the dry fuel would continue to play an important role in the country’s energy security for the next 10-15 years.

There is a rise in demand for coal as renewable sources have not matured to meet the energy requirement, he added.

(PTI)

nirmala sitharaman

No Cabinet Decision On Privatisation Of Two PSBs: FM

, , , ,

Responding to a question in the Rajya Sabha, Finance Minister Nirmala Sitharaman said the Cabinet has not taken any decision on privatisation of two PSBs which the government had announced in Budget 2021-22.

The Cabinet has not taken any decision on privatisation of two Public Sector Banks (PSBs), which the government had announced in Budget 2021-22, Parliament was informed on Tuesday. In the Union Budget for the financial year 2021-22, the government had announced its intent to take up privatisation of two PSBs in the year and approval of a policy of strategic disinvestment of public sector enterprises, Finance Minister Nirmala Sitharaman said in a written reply in the Rajya Sabha on Tuesday.

She was responding to a question on the privatisation of two PSBs. The objectives of the policy include enablement of growth of public sector enterprises through the infusion of private capital, technology and best practices, the minister said.

“Consideration of various issues related to disinvestment is entrusted to the Cabinet Committee designated for this purpose/ Cabinet. The decision by the Cabinet Committee/Cabinet has not been taken in this regard,” Sitharaman said further. The bill related to the privatisation of PSBs has been listed for the ongoing winter session of Parliament which ends on December 23.

(PTI)

nirmala sitharaman

Finmin Asks PSU General Insurers To Rationalise Branches, Cut Expenses

, , , , , , , ,

The advisory of the ministry follows Parliament”s approval to a bill to allow privatisation of state-owned general insurers in August in line with the Budget announcement.

The finance ministry has asked public sector general insurance firms to rationalise branches and cut avoidable expenses to improve their financial health.

Of the four public sector general insurers, National Insurance, Oriental Insurance, and United India Insurance are loss-making. The outlier in this segment is New India Assurance.

The advisory of the ministry follows Parliament”s approval of a bill to allow privatization of state-owned general insurers in August in line with the Budget announcement.

The finance ministry has asked these companies to rationalise branches and also trim administrative layers wherever possible, sources said.

Besides, sources said, they have been asked to expand their business through a cost effective digital medium.

“Public sector general insurance firms are implementing various government schemes. Rationalisation of branches should not lead to hardship for the poor as they may have to travel long distances for settlement of their small claims for example cattle insurance or fasal bima,” General Insurance Employees All India Association general secretary K Govindan said.

As a stakeholder, the union raised these issues before the management of various companies, he said, adding, there should be presence of a branch in each district headquarter so that the poor don”t have to face any issue.

Finance Minister Nirmala Sitharaman in her Budget 2021-22 had announced a big-ticket privatisation agenda, including privatisation of two public sector banks and one general insurance company.

As part of the divestment strategy for the financial sector, the 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 this financial year.

The government has budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions during 2021-22.

Last year, the Union Cabinet decided to halt the merger process of three state-owned general insurance companies due to weak financial positions of these three companies. Instead, the government approved a fund infusion of Rs 12,450 crore to meet regulatory parameters.

As part of capital infusion exercise, the government approved raising authorised share capital of National Insurance Company Ltd to Rs 7,500 crore and that of United India Insurance Company Ltd (UIICL) and Oriental Insurance Company Ltd (OICL) to Rs 5,000 crore each.

The Rs 12,450 crore capital infusion approved by the Cabinet in July includes Rs 2,500 crore provided to these companies during 2019-20. During this year, the government infused Rs 3,475 crore while announcing infusion of the balance Rs 6,475 crore in one or more tranches. 

(PTI)