Context:

• India is looking to privatise more than half of its state-owned banks to reduce the number of government-owned lenders to just five as part of an overhaul of the banking industry.

Part of the Plan:

• The first part of the plan would be to sell majority stakes in Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank.
• Have only 4-5 government owned banks.
• At present, India has 12 state-owned banks.

Need:

• The government is working on a privatisation plan to help to raise money by selling assets in non-core companies and sectors when the country is strapped for funds due to lack of economic growth caused by the corona virus pandemic.
• Reserve Bank of India has recommended that India should have not more than five state-owned banks.
• The government has already said that there will be no more mergers (between state-owned banks) so the only option for them is to divest stakes.

Reference: https://www.livemint.com/industry/banking/govt-plans-to-reduce-number-of-psu-banks-to-just-five-report-11595243683640.html

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