Centre to appoint advisor for stake sale in PSBs, insurance cos

The Department of Investment and Public Asset Management (DIPAM), under the Finance Ministry, has floated a Request for Proposal (RFP) to appoint a consultant for advice on stake sale in banks and insurance companies.

Disinvestment of public sector banks and insurance companies is the next big move after three rounds of amalgamation of public sector banks in recent times. As of now, the government owns 12 public sector banks and seven insurance companies.

On October 30, in an interview to BusinessLine, Finance Minister Nirmala Sitharaman had said, “I would, probably in the later part of next year, focus on some more retail participation in ownership of the banks.”

Policy soon

DIPAM’s move to appoint a consultant appears to set the blueprint to achieve this. It is also important as the Cabinet is expected to soon consider a policy on Public Sector Enterprises. It is proposed that in strategic sectors, at least one enterprise will remain in the public sector and private sector will also be allowed.

According to the RFP, “the consultant is expected to be not only conversant with the subject matter but should understand, appreciate and advise on all aspects of disinvestment, particularly with reference to banking and insurance sector.”

Role of consultant

The responsibility of the consultant includes assisting DIPAM in formulating the processes and procedures for different modes of disinvestment, including strategic disinvestment with respect to banking and insurance sector that is compatible with government rules and regulations.

The consultant will also assist in resolving the difficulties faced by Divisional Head in carrying out disinvestment transactions.

The job profile of the consultant would be to assist DIPAM in matters relating to management of government equity in banks, insurance companies and financial institutions. The consultant may be required to prepare background reports on the above sectors.

Qualifications required

Essential qualifications for the consultant are: MBA (Finance) or Post-Graduate in Economics/Commerce, Certified Associate of the Indian Institute of Bankers or equivalent exam and at least 30 years of experience in banking, insurance and financial institutions.

The candidate should not be more than 65 years of age. Initially, the tenure will be one year but can be extended for a maximum period of two years.

Disinvestment target

The government has set a disinvestment target of ₹2.10-lakh crore for the current fiscal, out of which disinvestment of government stake in public sector banks and financial institutions (including LIC and IDBI Bank) is ₹90,000 crore while the remaining is to come from sale of stake in Central Public Sector Enterprises. Sale of residual stake in IDBI Bank is yet to take place while pre-IPO formalities for LIC have not been completed.