New Delhi, Feb. 2 -- The government is likely to kickstart privatization in the banking sector with stake sales in two small state-run banks, Punjab and Sind Bank and Bank of Maharashtra, according to analysts.

Delivering her budget speech on Monday, finance minister Nirmala Sitharaman said the government plans to privatize two sate-run banks along with IDBI Bank in the next fiscal.

Sitharaman said legislative changes will be introduced during this parliamentary session to enable the divestment.

After the merger of 13 public sector banks into five last year, Sitharaman was expected to make a policy announcement on privatization of state-run banks in next fiscal year's budget as a first step towards overhauling the banking sector.

She,...