The much awaited privatisation of two state-owned banks will be delayed with the Modi government unlikely to table Banking Laws (Amendment) Bill 2021 in the ongoing session of Parliament.

With the Winter session ending Thursday, the government’s top priority is to secure the House’s approval for gross additional spending of Rs 3.74 lakh crore under the the supplementary demand for grants to be taken up on Monday or Tuesday, sources said.

With the crucial assembly polls in Uttar Pradesh and Punjab among others slated to be held early next year, the government is keen to go slow on the reform agenda to minimise the political damage it has suffered because of the year-long protests by the farmers.

The government had withdrawn the three farm legislations after the farmer agitation and the bank unions, which observed a two-day strike, plan to hold further industrial action in the coming months.

Finance minister Nirmala Sitharaman had said in her budget speech for 2021-22 that two public sector banks (PSBs) will be privatised during the fiscal as part of the government’s disinvestment drive to mop up Rs 1.75 lakh crore.

According to the intent of the proposed bill, for privatising two PSBs, amendments need to be made in Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and 1980 as well as incidental amendments in Banking Regulation Act, 1949.

Banking Laws (Amendment) Bill, 2021, was expected to bring down the minimum government holding in the PSBs to 26 per cent from 51 per cent. Sources said a final call in this respect would be taken by the Union cabinet.

Finance ministry officials said they are yet to shortlist the banks for privatisation. This could push the privatisation exercise to the next fiscal.

Government think tank Niti Aayog has reportedly recommended the sell-off of Indian Overseas Bank and Central Bank of India to the core group of secretaries on disinvestment,.

The Centre had already listed the bank privatisation bill. The objects of the bill said it was meant “to effect amendments in Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980 and incidental amendments to Banking Regulation Act, 1949 in the context of Union Budget announcement 2021 regarding privatisation of two Public Sector Banks”. These Acts led to the nationalisation of banks in two phases and provisions of these laws have to be changed for the privatisation of banks.