The government has sought to give a boost to divestments in the public sector banks by giving incentives for carrying forward losses of such lenders.
“To facilitate certain strategic disinvestments, it is proposed to allow carry forward of accumulated losses and unabsorbed depreciation allowance in the case of amalgamation of one or more banking company with any other banking institution or a company subsequent to a strategic disinvestment, if such amalgamation takes place within 5 years of strategic disinvestment,” the annexure to the Union Budget 2023-24 read.
It also proposed to modify the definition of ‘strategic disinvestment’.
The government has lined up the sale of IDBI Bank and may also look at the privatisation of PSU banks. The Budget measure will give a boost to the divestment process.
Changes in law
Also, to improve governance and enhance investors’ protection, certain amendments to the Banking Regulation Act, the Banking Companies Act and the Reserve Bank of India Act are proposed.
It has also extended an interest rate benefit to non-banking finance companies.
The restriction on interest deductibility on interest payment to overseas associated enterprise does not apply to those in the business of banking and insurance.The government has now proposed to extend this benefit to non-banking financial companies, as may be notified.