Govt might scrap plan to hire banks for stake sale

The government is considering scrapping the banker appointment process for stake sales in five state-run companies including National Mineral Development Corporation, India's largest iron ore producer, people familiar with the matter said.

The department of disinvestment at the finance ministry might not hire advisers for the asset sale following banker presentations earlier in the day, they said, asking not to be identified as the information is private. The group of five companies, known as 'Basket One,' also has Oil India, MMTC, Container Corporation of India, and India Tourism Development Corp.

SBI Capital Markets, ICICI Securities and YES Bank were scheduled to make presentations on Thursday, according to the department's website. None of the foreign banks bid for this batch, while Deutsche Bank AG was among those picked for the sale of five other firms in "Basket Two," including National Thermal Power Corporation, the nation's largest power generator, sources said on Wednesday.

A decision will be taken next week at an inter-ministerial meeting, one of the people said. Finance ministry spokesman DS Malik declined to comment.

The ministry was seeking to appoint the banks for a period of three years. The government plans to raise Rs 69,500 crore ($10.9 billion) by selling stakes in the financial year ending March 31, an amount crucial to its efforts to narrow the Budget deficit.

Along with Deutsche Bank, ICICI Securities, SBI Capital Markets and Edelweiss Financial Services were chosen to work on the sale of companies comprising Basket Two. Kotak Mahindra Bank, JM Financial and YES Bank had also pitched for the mandate.