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Informist, Thursday, Apr. 17, 2025

 

--Sources: May do QIP in 5 PSU bks as govt not in favour of OFS to cut stake

--Sources: OFS in PSU bks to cut govt stake tough amid market volatility

--Sources: May extend deadline to meet minimum public shareholding for PSUs

By Priyasmita Dutta and Sagar Sen 

 

NEW DELHI – The five public sector banks, which are yet to meet the mandated minimum public shareholding norms, will likely have to rely on the qualified institutional placement route as the government is not in favour of tapping the retail equity market, two finance ministry officials told Informist.

 

"Given the current volatility in equity market conditions, it is very unlikely we will do OFS (offer for sale) this fiscal. QIP is a better option for them," one of the officials said. "These banks are doing well financially. Doing an OFS at this time will not do justice to them," the official said. "Besides, they can improve their operations with capital they will raise from institutional investors."

 

The government had in August 2024 allowed five public sector banks — Bank of Maharashtra, Central Bank of India, UCO Bank, Indian Overseas Bank, and Punjab & Sind Bank — time till Aug. 1, 2026, to meet the public shareholding norms. As per the Securities Exchange Board of India's Securities Contract (Regulation) Rules, all listed companies, including public sector companies, must have a minimum public shareholding of 25%.

 

As at the end of March, public shareholding in Bank of Maharashtra was 20.4%, while it was 10.73% in Central Bank of India, 9.05% in UCO Bank, 5.39% in Indian Overseas Bank and 6.15% in Punjab & Sind Bank. Going by their share prices at close on Wednesday, the five state-owned banks collectively need to raise INR 300 billion to meet the minimum public shareholding norm.

 

Media reports in January said the five banks received government approval to raise a total of INR 100 billion through QIPs. Since then, four of them have raised around INR 70 billion through the route. Bank of Maharashtra had said in January that it plans to raise INR 25 billion in 2025-26 (Apr-Mar) through QIP.

 

The second official quoted above said that the government may have to give these banks an extension to meet the minimum public shareholding norms. "There is only so much money they can raise from investors each year. So they will need more time," the official said. End

 

Edited by Saji George Titus

 

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