Shares of Indian Overseas Bank (IOB) and Central Bank of India rallied on Wednesday amid speculations that the federal government has taken a choice to privatise these lenders, as advised by the Niti Aayog. Shares of IOB closed up 13.1% to Rs 22.45 on the BSE, whereas the scrip of Central Bank rose 10.5% to Rs 22.70. Shares surged by over 20% in intra-day commerce earlier than paring some features.
Meanwhile, IOB and Central Bank on Wednesday clarified to the stock exchanges that they hadn’t acquired any info from the federal government on the privatisation transfer.
Speculations about privatisation gained momentum a day after the Centre’s legislative agenda advised that the Banking Laws (Amendment) Bill 2021 for privatisation of two public-sector banks shall be taken up in the course of the winter session of Parliament.
In a regulatory submitting, IOB mentioned: “…we do not have any information on privatisation of the bank as on date. There is no such negotiation/event taking place at the bank.” Central Bank of India, too, mentioned, “…we inform that we have not received any communication regarding privatization of bank from DFS/Government of India and we are unaware of the reasons for the sudden movement in stock price. It may be due to speculation”.
The Bill to be taken up by Parliament seeks to “effect amendments to Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980 and incidental amendments to Banking Regulation Act, 1949 in the context of Union Budget announcement 2021 regarding privatisation of two public sector banks”.
Fitch had in June mentioned the plan to privatise two PSBs in FY22 may very well be delayed, because the “bold move” confronted danger from political opposition and structural challenges, together with heightened balance-sheet stress within the wake of the Covid-19 outbreak.
Government officers, nevertheless, have mentioned the work is in full swing and the names of the eligible candidates would quickly be formally declared.