New Delhi: The government is expected to announce its commitment to financial sector reforms in the upcoming interim budget, laying the road map for big-ticket announcements in 2024-25, including the privatization of a state-owned bank and a general insurance firm, people with knowledge of the matter said. the thing
Finance Minister Nirmala Sitharaman is also likely to announce a renewed focus on financial inclusion through a digital push on February 1, they said.
The government is also expected to give final shape to the Insurance Amendment Bill, which is slated to be introduced in the next financial year, paving the way for strategic reforms in the sector, the people said, adding that some of the key announcements made during the a second term of the Modi government, including the privatization of two state-owned banks and one general insurance company, is expected to begin in 2024-25.
“The interim budget will reaffirm the government’s commitment to financial sector reforms. It could be an announcement about the digital push in financial inclusion plans,” said an official who did not wish to be identified.
Digital banking units (DBUs) will increasingly play a bigger role in the financial inclusion plans of the government, including PM Vishwakarma, where it offers collateral-free loans at concessional rates to artisans and craftsmen, the official said.
There are nearly 100 DBUs operating all over the country.
Click here to pay Budget 2024 Live Coverage
In both the insurance and banking sectors, there will be a renewed effort to identify new entities for privatization, the official said.
Sitharaman announced the privatization of two state-owned banks as part of the government’s disinvestment program in her 2021 budget speech. In the same year, the government listed the Banking Laws (Amendment) Bill 2021, but it has yet to be introduced in the Parliament
The bill sought to make amendments to the Banking Companies (Acquisition and Transfer of Enterprises) Acts of 1970 and 1980 and incidental amendments to the Banking Regulation Act of 1949 to facilitate the privatization of the two state-controlled banks.
“The IDBI deal should happen in the first half of the next fiscal year, and in the meantime, the next candidate would be identified,” said the official quoted earlier.
According to reports, a list of conglomerates, such as the Piramal Group, are keen to acquire the state-owned lender.
The Reserve Bank of India is monitoring applications made by interested bidders in IDBI Bank, where the government and Life Insurance Corporation intend to divest their 60.72% stake.
The government will also start a fresh assessment of the insurance sector, and one general insurance company will be put on the block.
In 2021, the government announced the General Insurance Business (Nationalization) Amendment Act, which will allow the government to cut its investment in state-owned general insurers below 51%.
The government is also likely to introduce in the next fiscal the Insurance Laws (Amendment) Bill, which proposes a composite licensing provision allowing insurers to undertake general and health insurance through a single unit.