For privatization of banks, the Modi government can repeal the Banking Companies Act enacted in 1970 for nationalization of banks. It will not be difficult for the government to do so as it is able to pass the bill from both houses of Parliament.
The government source said that the privatization of state-run banks with weak economic condition will provide relief to the government as it has to invest capital in those banks year after year. However, the government is preparing a plan to move slowly on privatization so that maximum amount can be obtained. From 2015 to 2020, the central government had invested Rs 3.2 lakh crore in state-run banks in bad loans. Even after this, the market capitalization of these banks has decreased rapidly. This crisis has deepened in the Corona era.
Law made by Indira government in 1970 will be repealed: For the privatization of banks, Modi government can repeal the Act of Banking Companies in 1970 for the purpose of nationalization of banks. It will not be difficult for the government to do so as it is able to pass the bill from both houses of Parliament. Indira Gandhi nationalized 14 private banks in 1970 and once again in 1980, 6 private banks became part of the government sector.
Promotion of privatization in other areas as well: Apart from banks, Modi government is also promoting privatization in other sectors. Apart from privatization of oil marketing company Bharat Petroleum Corporation Limited, the government has also prepared to approve private companies in the field of coal mining. Talking about banking sector, due to mergers and privatizations in the last 3 years, the number of state-run banks has been reduced from 27 to 12, which is now set to be limited to 4.