Govt Mulls Stake Sale In Four State-Run Banks To Meet Public Shareholding Norms

The finance ministry is expected to seek federal cabinet approval in the coming months to dilute its stake in Central Bank of India, Indian Overseas Bank, UCO Bank, and Punjab and Sind Bank

Shares of the four banks gained between 3 per cent and 4 per cent following the news.

Source : ABPLIVE AI

The central government is considering selling minority stakes in four state-owned banks to comply with public shareholding norms mandated by the Securities and Exchange Board of India (SEBI), a government official told Reuters. The finance ministry is expected to seek federal cabinet approval in the coming months to dilute its stake in Central Bank of India, Indian Overseas Bank, UCO Bank, and Punjab and Sind Bank, the source said.

As of September-end, government holdings in these banks were significantly above SEBI's public shareholding threshold of 25 per cent. The government owns over 93 per cent in Central Bank of India, 96.4 per cent in Indian Overseas Bank, 95.4 per cent in UCO Bank, and 98.3 per cent in Punjab and Sind Bank, according to BSE data.

The stake sale is likely to be executed through an open market offer for sale, the official stated, adding that the timing and quantum of the sale would depend on prevailing market conditions.

Market Reaction and SEBI Deadline

Shares of the four banks gained between 3 per cent and 4 per cent following the news. SEBI's norms mandate listed companies to maintain at least 25 per cent public shareholding. However, government-owned firms have been granted an exemption from this requirement until August 2026.

The official did not comment on whether the government plans to meet SEBI's deadline or if it might seek an extension.

Past Capital Raising Efforts

In recent years, public sector banks have relied on qualified institutional placements (QIPs) to raise capital, which has helped reduce government stakes. For instance, Punjab National Bank raised Rs 5,000 crore through a QIP in September, and Bank of Maharashtra raised Rs 3,500 crore in October.

The finance ministry has not yet responded to a request for comment on the potential stake sales.