The central government is examining options to privatize at least 6 of the public sector banks thereby reducing the number of such PSU banks to just 5. Government sources confirmed the news about such a move and said the first phase of the proposed privatization would be to reduce stakes in Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank. The idea is to have 4-5 government owned banks, according to a senior government official quoted in the news reports. The government is said to be formulating the privatization proposal, which would in be presented to the cabinet for approval. Several government committees and the Reserve Bank of India have recommended that India should have not more than 5 state-owned banks. The government is not in favour of further mergers between these banks and the only route therefore is to privatize them. However, the stake sale may not happen in the current financial year as the market conditions are not favourable at this point of time.
