Privatisation plans for Central Bank of India, Indian Overseas Bank likely to face hurdles:



🍒 Privatisation plans for Central Bank of India, Indian Overseas Bank likely to face hurdles: Analysts : The weak financial metrics of lenders like Central Bank of India and Indian Overseas Bank (IOB) may throw unexpected hurdles to the government’s plan to privatise at least two of the state-run banks in the initial phase, according to banking analysts and experts. On June 8, shares of Central Bank and IOB soared 7-14 percent on reports that the Niti Aayog has recommended the names of the two banks to the government for privatisation. Both the lenders are currently under the Prompt Corrective Action (PCA) imposed by the Reserve Bank of India (RBI). PCA involves the imposition of certain business restrictions on banks with weak financial metrics by the RBI. The nature and degree of curbs are threshold-based and depend on the financial profile of each individual bank. Investor interest might be especially muted for banks which are currently restricted from pursuing loan growth to higher-yielding borrowers and branch expansion under the RBI's PCA, Saswata Guha, senior director, banks at Fitch India Services, said in a report dated June 7. -

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