Synopsis:
The government has appointed Goldman Sachs to manage its plan to reduce stakes in four public sector banks through Offer for Sale.
The government is moving forward with banking reforms, with a focus on reducing its stake in public sector banks (PSBs), improving governance standards, and meeting regulatory requirements. The plan aims to boost efficiency, increase institutional participation, and strengthen the sector’s competitiveness.
What is News’s?
As per the sources, the government is planning to reduce its stake in four public sector banks (UCO Bank, Central Bank of India, Punjab & Sind Bank, Indian Overseas Bank) by up to 5 percent, starting this fiscal year (FY26) and continuing over the next 2–3 years. Currently, government holdings in these banks are above 89 percent.
For this stake sale, the Government has appointed Goldman Sachs to manage the process, which will be carried out through Offer for Sale (OFS) transactions approved by DIPAM. The firm will be responsible for structuring the deal, identifying potential investors, and overseeing the seamless execution of the stake sale.
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Other updates
Department of Investment and Public Asset Management (DIPAM) has approved OFS for five banks, including four mentioned above and another one is Bank of Maharashtra. Bank of Maharashtra, is expected to meet the 25 percent minimum public shareholding rule through a Qualified Institutional Placement (QIP). The government may also seek an extension of the August 2026 deadline for meeting this requirement, pushing it to 2027, since the stake reduction will be gradual.
Separately, the government is preparing to invite financial bids for the strategic sale of IDBI Bank between October and December 2025, with a successful bidder likely to be finalized by the end of FY26. These steps are part of broader reforms to improve efficiency, strengthen governance, and deepen India’s capital markets, and comply with SEBI’s MPS norms.
In FY2025–26, the government plans to raise about Rs. 45,000 crore through QIPs by public sector banks, while also pursuing OFS in UCO Bank, Bank of Maharashtra, Central Bank of India, Punjab & Sind Bank, and Indian Overseas Bank, as part of Prime Minister Modi’s broader Rs. 47,000 crore divestment and asset monetization target.
Written by Akshay Sanghavi
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