Synopsis:
Public sector banks aim to raise Rs. 45,000 crores via QIPs in FY26, while the government advances IDBI, LIC, and other PSBs stake sales to meet its Rs. 47,000 crore disinvestment target.
India’s public sector banks (PSBs) are expected to raise nearly Rs. 45,000 crore (~$5.25 billion) via qualified institutional placement (QIP) in FY26, according to the sources. The move is a part of a broader capital-raising and divestment plan. The State Bank of India (SBI, the country’s largest lender by assets) is gearing up to roll out its QIP in the near future.
Back in May 2025, SBI received Board approval to raise up to Rs. 25,000 crores ($3 billion) in equity capital, through a public offering or a private placement of senior unsecured notes during FY26, denominated in US dollars or other major foreign currencies.
The government’s strategic disinvestment in IDBI Bank — involving a total 60.72 percent stake split between the Centre (30.48 percent) and LIC (30.24 percent), is expected to be completed by October 2025.
Fairfax India Holdings (promoter of CSB Bank), Kotak Mahindra Bank, and Emirates NBD are among the shortlisted bidders and are expected to submit their financial offers in the coming days.
This stake sale in IDBI Bank is expected to give a solid boost to the government’s non-debt capital receipts. For FY26, the centre is aiming to raise Rs. 47,000 crore through disinvestment and monetisation of assets.
In parallel, the government is also preparing to sell stakes in several other PSBs through the Offer for Sale (OFS). These include UCO Bank, Bank of Maharashtra, Central Bank of India, Punjab & Sind Bank, and Indian Overseas Bank, all expected to see stake sales during FY26.
In addition, the Department of Financial Services has approved a stake sale in Life Insurance Corporation (LIC) through the OFS, and if it goes ahead, this will be the first time the government reduces its holding in LIC since its IPO in 2022.
Raising funds through QIPs plays a crucial role in boosting a bank’s Tier 1 capital. This core capital is considered the most reliable financial cushion for a bank, supporting its daily operations and overall stability.
Written by Shivani Singh
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