SBI Advocates for PSB Disinvestment and Banking Sector Reforms Ahead of Union Budget 2024-25

State Bank of India (SBI) has recommended the disinvestment of public sector banks and consolidation of government-owned banks in its research report. The report also addresses concerns about the Insolvency and Bankruptcy Code and suggests tax policy changes to boost household financial savings. Enhanced budget allocations for ADR methods are also recommended.

State Bank of India (SBI) has urged the government to proceed with disinvestment of public sector banks, citing their strong financial condition. This recommendation comes in SBI's latest research report titled 'Prelude to Union Budget 2024-25.' The report also advocates for the consolidation of existing government-owned banks.

Addressing the ongoing privatization of IDBI Bank, the report notes that both the Government of India and Life Insurance Corporation of India are selling nearly 61 percent stake. Expressions of interest were invited in October 2022, with several responses received by January 2023. Clarification on this issue is expected in the forthcoming Budget.

Additionally, the report suggests tax policy changes to align deposit interest rates with mutual funds, aiming to boost household financial savings. The SBI research team also called for reforms in the Insolvency and Bankruptcy Code, citing the need for quicker resolutions and a more attractive regulatory regime for Special Situation Funds. In another budget recommendation, Akshat Khetan from AU Corporate and Legal Advisory Services calls for increased budget allocations to promote mediation and arbitration to ease the burden on traditional courts.

(With inputs from agencies.)