Finance

Indian Overseas Bank, Central Bank of India clarify on privatisation buzz

Amid privatisation buzz, Indian Overseas Bank (IOB) and Central Bank of India (CBI) on Wednesday informed the stock exchanges that they received no information from government on these lines. The clarification comes a day after Centre’s legislative agenda for Winter Session hinted at tabling of Banking Laws (Amendment) Bill 2021 bill for privatisation of two public sector banks.

The bill seeks to “effect amendments in Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980 and incidentalamendments to Banking Regulation Act, 1949 in the context of Union Budget announcement 2021 regarding privatisation of two Public Sector Banks”.

“As regards the captioned media news, we do not have any information on privatization of the Bank as on date. There is no such negotiation/event taking place at the Bank,” Central Bank of India said in a regulatory filing. IOB said, “…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.”

Shares of two state-owned banks, IOB and CBI, rallied up to 20 per cent on the BSE in Wednesday’s intra-day trade on back of heavy volumes amid media reports that the two financial institutions might be privatised.

On Wednesday, IOB’s scrip on NSE had surged 20 per cent to Rs 23.80, before ending the day 13.6% higher at Rs 22.50, while CBI’s scrip on NSE gained 15 per cent on the BSE in intra-day trade before ending the day 10% higher at Rs 22.60.

In September, Reserve Bank of India (RBI) had removed Prompt Corrective Action (PCA) restrictions on IOB while Central Bank of India continues to be under the PCA framework.

The government will seek buyers for two state-run banks by March 2022, Finance Minister Nirmala Sitharaman had said in February, as she outlined the nation’s budget for the current financial year that began April 1.

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