A clarification is expected from the government on IDBI bank stake sale and further clarifications on PSB divestments, revealed a latest report by the State Bank of India.
As banks are in good condition, Government should take stance on disinvestment of public sector banks. Further, Government and Life Insurance Corporation of India are selling an almost 61 per cent stake in IDBI Bank. They invited bids from buyers in October 2022.
In January 2023, DIPAM received several expressions of interest for the IDBI Bank stake on offer. We expect Government to clarify this in the upcoming Budget, the report stated.
Further, the Government is expected to look into the concerns over IBC that must be improved and expediting of cases under IBC should be a key change, said the report.
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Timely resolution of stressed assets that could ensure maximum recovery was a key element of the IBC code. IBC helped in creating a mechanism to resolve the deadlock between stressed borrowers and lenders, made defaulting companies more conscious about debt, and gave lenders a tool to maximize their recoveries.
However, the resolution process has been slow due to factors such as litigation, dissenting creditors and poor infrastructure.
Recoveries through IBC in FY24 were 32 per cent, and financial creditors lost 68 per cent of their claims. The time taken to reach resolution is 863 days instead of the stated 330 days.
Thus, the report said that an improved process for IBC and expedition of the cases under IBC is expected from the government in Budget 2024.
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Banking Expectations
The report by SBI highlighted some of the expectations from the government for Union Budget 2024 for the banking sector.
Issuances of new banking licenses, consolidation of existing banks and need for larger number of PSU banks is expected from the government from the upcoming budget.
Further, reduction of ownership stake in PSU banks, HR autonomy, aligning PSL framework to nation’s priorities, extending credit to informal micro enterprises and improving the share of Credit Guarantees to MSMEs is expected from the government this budget, the report added.
The government is also expected to invest in digital and IT infrastructure and further also look into addressing issues related to delayed payments.
Pension reforms
Driving awareness for pension products, multi-media awareness campaigns on pension, inclusion of financial literacy programs in school and college curriculums should also be a core focus of the government for Budget 2024, said the report.
Further, the Government is expected to foster innovation in pension offerings, bring about changes in the National Pension Scheme, offer flexibility in investment options and consider introducing inflation protected annuity products.
