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Informist, Thursday, Jul. 9, 2026

 

--Fin min source: May sell stake in IOB, Central Bk Jul-Sept via OFS, QIP

--Fin min source:May cut UCO Bk, Punjab & Sind Bk stake Jul-Sept via OFS, QIP

--Fin min source: See strong investor appetite for PSU bank equity stake

 

By Priyasmita Dutta and Sagar Sen

 

NEW DELHI – The government will likely dilute its stake in four public sector banks--Indian Overseas Bank, Central Bank of India, UCO Bank, and Punjab & Sind Bank--in the current quarter through the offer-for-sale or qualified institutional placement route, a senior finance ministry official said. The move will help these banks meet the Securities and Exchange Board of India's minimum public shareholding norm.

 

"Government is planning to do OFS or QIP, or a combination of both, to sell stake in these banks over the next few weeks," the official told Informist, without divulging more details.

 

SEBI rules require all listed companies to have a minimum public shareholding of 25%, and currently, four of the 12 public sector banks do not comply with these norms. The Department of Financial Services had approved the fundraising plans of five public-sector banks through QIP and offer for sale in the second half of FY26, but the plans were impacted due to market volatility. These approvals are typically granted for a year, allowing the state-owned banks to hit the market at an opportune time.

 

"The finance ministry had given in-principle nod for QIP or OFS in Central Bank of India, UCO Bank, and Punjab & Sind Bank in Q3 (Oct-Dec) last year to lower stake, but the timeline got impacted due to market conditions," the official said. "There is strong demand from retail and non-retail investors currently, and we are waiting for some more approvals before the stake sales are announced," the official added. 

 

In December, the government had offloaded a 6% stake in Bank of Maharashtra and a 2.17% stake in Indian Overseas Bank, and an 8.08% stake in Central Bank of India in May. Following the sale, the public shareholding in Bank of Maharashtra now stands at 26.4%, making it compliant with the SEBI norm. For Indian Overseas Bank, the public shareholding now stands at 7.56%, while for Central Bank of India, it stands at 18.81%. The government's stake in UCO Bank and Punjab & Sind Bank is much higher, at 90.95% and 93.85%, respectively.

 

As such, the boards of Central Bank of India, Indian Overseas Bank, UCO Bank, and Punjab & Sind Bank have already approved these banks' fundraising plans via debt and equity instruments to the tune of INR 30 billion–INR 70 billion. Bank of Maharashtra, which is compliant with SEBI's minimum public shareholding norm, also plans to raise funds through QIP in FY27 to boost its capital.

 

Lowering stake in these banks will also help the government shore up miscellaneous capital receipts in 2026-27 (Apr-Mar), something it has put a thrust on since the start of the fiscal. The government has collected INR 185.61 billion from minority stake sales so far, data from the Department of Investment and Public Asset Management showed, higher than the INR 168.86 billion it collected in entire FY26.

 

The government collected INR 185.61 billion from the stake sale in six public sector enterprises so far--Central Bank of India, Coal India Ltd., NHPC Ltd., NLC India Ltd., General Insurance Corp. of India, and Indian Railway Finance Corp. Ltd., data showed. The government had cut its stake in six PSUs in all of FY26. The government also collected INR 63.67 billion from asset monetisation during the first three months of FY27. This will help it meet the ambitious capital receipts target of INR 800 billion for FY27. 
 

Central Bank of India has 9.05 billion shares issued and outstanding. The government will have to sell 560 million shares of the bank to meet the public shareholding norm. UCO Bank has 12.54 billion shares, and the government will have to sell 2 billion shares for the bank to meet the norm. Punjab & Sind Bank has 7.10 billion shares, and the government will have to sell 1.34 billion shares to meet the 25% public float norm. In Indian Overseas Bank, the government needs to sell 3.35 billion shares, out of the total 19.26 billion outstanding shares, to meet the norm.

 

Based on their stocks' closing level on Wednesday, the government will collect nearly INR 215 billion if it sells all the 7.25 billion shares that it has to let go in these four banks to enable them to comply with SEBI's public shareholding norm.  End

 

Edited by Akul Nishant Akhoury

 

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