Three state-owned banks—UCO Bank, Punjab & Sind Bank, and Indian Overseas Bank—may sell shares to financial institutions in the next fiscal year to raise capital and align with minimum public shareholding (MPS) norms set by the stock market regulator, Mint reported.
The government currently owns over 95 percent in these banks, with the remaining stake held by public investors, the report said. As per Securities and Exchange Board of India (Sebi) regulations, all listed companies must maintain at least 25 percent public shareholding.
According to Mint, the banks are likely to conduct multiple rounds of qualified institutional placements (QIPs) in FY26, depending on market conditions, to gradually meet regulatory requirements.
"The government has allowed PSBs to explore equity dilution this year and time their market offers strategically. While the exact quantum will be determined closer to the offers, the stake sale is expected to range between 5-10% of paid-up equity capital this year, with further divestment staggered over the next few years," Mint quoted sources as saying.
Spokespersons for the finance ministry and the three PSBs did not respond to Mint’s emailed queries. Moneycontrol could not independently verify the report.
Sebi, which mandated a 25 percent MPS rule for all listed companies in August 2024, gave public sector banks (PSBs) until August 2026 to comply. Life Insurance Corp. of India (LIC) has until May 16, 2027, to reach a 10 percent public shareholding. As of December 31, 2024, seven of the 12 PSBs—State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Indian Bank, Union Bank of India, and Bank of India—had met the requirement.
Bank of Maharashtra and Central Bank of India are yet to take steps to comply.
The government had budgeted Rs 50,000 crore in capital receipts for the current fiscal year, later revising it to Rs 33,000 crore as several disinvestment and monetisation plans failed to materialize.
The government currently owns 93.08 percent in Central Bank of India, 79.60 percent in Bank of Maharashtra, 95.39 percent in UCO Bank, 98.25 percent in Punjab & Sind Bank, and 96.38% in Indian Overseas Bank.
At current market prices, the government’s stake sales in these five banks to meet MPS norms are valued at approximately Rs 50,000 crore, with Indian Overseas Bank alone accounting for about Rs 20,000 crore, Mint reported.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
