Credit rating agency ICRA on Thursday cautioned that if the Government divests majority stake in the Public Sector Banks (PSBs) that were left out of the PSBs consolidation exercise announced by Government of India (GoI) last year, it will be credit negative for them.
The agency expects the deposit franchise for these banks to be monitorable as these deposits could be highly sensitive to their ownership.
Bank of India, Central Bank of India, Bank of Maharashtra, UCO Bank, Indian Overseas Bank and Punjab & Sind Bank were the PSBs that were left out of the consolidation exercise.
GoI owns 83-96 per cent stake in these six banks with a market value of around ₹58,000 crore as on end July 2020.
The agency observed that while the stake sale could result in the GoI to meet part of its divestment targets, it will also save it from the potential future liabilities