 "Bank Privatisation")
Union Budget 2024: Bank privatisation may not be mentioned in the upcoming Union Budget in February since it is only a vote on account, reported Moneycontrol citing experts.
"This is an interim Budget; so it's like a non-Budget you are not supposed to announce any new thing. Privatisation is a controversial thing. So personally I doubt. In most interim Budgets, they just repeat what they had in their election manifestos," said Montek Singh Ahluwalia, a prominent economist and former finance secretary and deputy chairman of the Planning Commission.
The vote on account is an interim Budget through which the incumbent government seeks Parliament's approval for expenditure required to run till the new government takes office.
On December 7, Finance Minister Nirmala Sitharaman stated that the NDA government's Union Budget on February 1, 2024, is unlikely to include any "spectacular announcements."
She noted that the regular Budget would be presented in July and that "you would have to wait till then."
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Speaking at the Confederation of Indian Industry's Global Economic Policy Forum 2023 in New Delhi, Sitharaman said, "I don't want to be a spoilsport, but the February 1 Budget is just a vote on account; a Budget to meet expenditure till the next government comes to power. No spectacular announcements, you will have to wait till after the general election."
R Gandhi, former Deputy Governor of the Reserve Bank of India (RBI), said, "It is only vote on account, not Budget. So don't expect any policy initiatives."
Sitharaman, while presenting Budget 2021-22, had announced the privatisation of public sector banks (PSBs) as part of the disinvestment drive to garner Rs 1.75 trillion.
The FM had then said that other than IDBI Bank, the government intends to privatise two public sector banks and one general insurance firm in 2021-22. However, no action was taken in response to this announcement.
"Every government makes the decisions at the right time. So, I don't think that anything is going to happen before the general elections," a finance ministry official was quoted as saying by Moneycontrol.
Current situation of public sector banks
According to industry experts, banks are currently in good stead and earning profits. "There is no chance of addressing issues such as bank privatisation in the interim Budget. Banks' status has improved significantly thanks to the earnings improvements of banks. Some banks have also been able to obtain good funds, and their capital position appears to be fairly nice; they are profitable," former finance secretary Subhash Chandra Garg said.
India's banking sector, in the July-September FY24 quarter, saw double-digit profits and improvement in asset quality, said the report.
Furthermore, some major banks reported a drop in their net interest margins (NIM), it added.
Among major banks, the State Bank of India (SBI) reported a net profit of Rs 14,330 crore in the July-September FY24 quarter. Bank of Baroda's (BoB) profit after tax stood at Rs 4,253 crore, while Punjab National Bank (PNB) reported a 327 per cent rise in net profit at Rs 1,756 crore for the latest July-September quarter.
"Public sector banks have been and will continue to be the backbone of India's financial sector. With the country's strong economic expansion, private sector banks have more than enough room to explore and thrive," stated Charan Singh, non-executive chairman of Punjab & Sind Bank.
He added that banks in India are in extremely good shape and are anticipated to stay that way. The interest rate cycle may shift in 2024-25, but banks will be able to fend for themselves thanks to the buffers.
