Moneycontrol News
The Centre is in the process of reducing its stake in public sector banks (PSBs) to below 75 percent in order to comply with Securities and Exchange Board of India (SEBI) norm of 25 percent minimum public shareholding of the listed entities.
United Bank of India, Indian Bank, Bank of Maharashtra, Central Bank of India, Punjab and Sind Bank, Indian Overseas Bank, UCO Bank and Bank of India are the eight PSBs where government stake is more than 75 percent at the end of September, as per a report published in the Financial Express.
Corporation Bank, Dena Bank and Syndicate Bank are other banks in which government holds between 70 percent and 25 percent.
The public sector banks are grappling with the issue of mounting non-performing assets (NPAs) and are finding it difficult to raise capital to meet with the Basel-III requirements. The Centre is looking at various options to increase the capital base of PSBs and bring down its stake below 75 percent.
A senior government official told the newspaper that the stake sale will depend on market conditions and may rope in domestic institutions like LIC to trim its holding.
Depending on the need and other parameters, the government would decide on further capital infusion in the bank.
The Centre had informed the Parliament in 2015 about its intention to bring down its holding in all public sectors banks to 52 percent once their financial condition improves.
The government’s holding in six out of eight PSBs increased due to capital infusion under the Indradhanush scheme.
Rating agency Fitch said last month that Indian Banks will need USD 65 billion of fund infusion to meet with Basel III capital adequacy norm by March 2019.
The government has time till August 2018 to bring down its stake below 75 percent in these banks to comply with norms.
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