India's bank privatisation may face hurdles amid Covid-19: Fitch

Political resistance; stress from pandemic may drag

Global rating agency Fitch today said the Indian government's bold move to privatise public sector banks (PSBs) faces risks from political opposition and structural challenges, including heightened balance-sheet stress due to Covid-19.

The pandemic is likely to keep bank performance subdued for the next two to three years. Lack of political support in favour of legislative changes to the Act, which are required in order to go through with the sale, could be a significant hurdle for the government.

There could also be more resistance from the trade unions this time around, who will be against the safety-net withdrawal of state ownership.