Bank of Maharashtra may be first to be Privatised out of 6 banks


A lot of news is pouring in regarding privatisation of six Govt banks left in the merger process last year when the Corporation Bank, Andhra Bank, Syndicate Bank, Allahabad Bank, Dena Bank were merged in other big banks to make them financially sound and all India presence like SBI.


At that time Bank of Maharashtra, Central Bank of India, Indian Overseas Bank, Bank of India, and Punjab & Sind bank were left alone. Everybody thought that due to election in Maharashtra and Haryana these banks were not touched. But the story was different now.

Now Bank of Maharashtra has posted a net profit of Rs.388.58 crore for FY 2019-20 as against a huge loss of Rs.4773.20 crore in the previous year. With this, the result is all eyes are on the Bank of Maharashtra now.

The financial results were as under:

The centre of attraction was Operating Profit zoomed up to Rs.2847 crore in 2019-20 compared to Rs.2197 crore posted in the previous year. The entire staff and management need a lot of appreciation for this growth in operating profit.

  1. The deposits Rs.150,066 crore on 31-3-2020 compared to Rs.140,650 crore on 31-3-2019.
  2. Advances increased marginally to Rs.86,872 crore on 31-3-2020 compared to Rs.82,666 crore on 31-3-2019.
  3. The bank has preserved the highest CASA deposit of 50% in 2019-20 also. This is one of the main reasons for good operating profits.
  4. Capital Adequacy ratio was 13.52% was excellent.
  5. Net NPA remained at 4.77%. Gross NPA was 12.81% on 31-3-2020.
  6. The yield on advances was low at 7.23% only as no interest will be generated for NPA of 12.81% advances. If the yield increases to 7.8% by a recovery in bad loans, the bank can post huge profits.
  7. No of branches was 1897, now smallest Govt bank with Pune headquarters and around 13,000 employees are having a good year ahead.

The govt share increased to a huge level of 92.49% due to a huge infusion of capital during the last three years. Now the government may declare shares to the public at a good premium and sell 280 crore shares at say Rs.50 per share or 80 per share to make it a private bank. Govt share comes to 48% only.


The Central Committee on Banking Service and Better Business Bureau (BBB) has approved the recommendation of Niti Aayog for privatizing 2 PSB viz Indian Overseas Bank (IOB) and Bank of Maharashtra (BOM). This is the first phase of privatization which the Central govt has directed to finalize the process before the FY 2021-22.

It has been decided by BBB to reduce the existing number of staff by 50%. Accordingly, an attractive VRS scheme will be launched for staff having a service of 20 years and above. Rest of the staff will be given performance-based pay with variable pay component being 30% of CTC. More details are awaited. The whole exercise is scheduled to be completed by September 30, 2020.

If sources have to be believed prime minister Modi is taking a personal interest in the matter of privatisation of three banks namely IOB, BOM & Punjab and Sindh Bank (PSB). As per the reliable information, some buyers have already shown interest in IOB & BOM. Finance Ministry is trying to do this exercise as soon as possible. There may be some more shocking decisions in the coming days. Be prepared.