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Concerning the privatization of banks, consider the following statements:
1. The Union Budget has announced the privatization of two public sector banks (in addition to IDBI Bank) and one general insurance company in the upcoming fiscal.
2. In 2019, the government merged ten PSU banks into four.
Which of the statements given above is/are correct?       
  • a)
    1 only        
  • b)
    2 only        
  • c)
    Both 1 and 2        
  • d)
    Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
Concerning the privatization of banks, consider the following statemen...
The Union Budget has announced the privatization of two public sector banks (in addition to IDBI Bank) and one general insurance company in the upcoming fiscal.
  • It also announced a strategic sale/disinvestment policy for four strategic sectors — including banking, insurance and financial services — in which it will have a “bare minimum presence”.
  • In 2015, the government had suggested privatization but the then RBI Governor did not favour the idea.
  • Years of capital injections and governance reforms have not significantly improved the financial position of public sector banks.
  • Many of them have higher levels of stressed assets than private banks and lag the latter on profitability, market capitalization and dividend payment records.
  • The government front-loaded Rs 70,000 crore into government-run banks in September 2019, Rs 80,000 crore in FY18, and Rs 1.06 lakh crore in FY19 through recapitalization bonds.
  • In 2019, the government merged ten PSU banks into four.
  • private banks’ market share in loans has risen to 36% in 2020 from 21.26% in 2015, while public sector banks’ share has fallen to 59.8% from 74.28%.
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Concerning the privatization of banks, consider the following statements:1. The Union Budget has announced the privatization of two public sector banks (in addition to IDBI Bank) and one general insurance company in the upcoming fiscal.2. In 2019, the government merged ten PSU banks into four.Which of the statements given above is/are correct? a)1 only b)2 only c)Both 1 and 2 d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
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