India’s leading PSU banks like Punjab & Sind Bank, Central Bank of India, and three others in focus after the Government of India plans to sell a stake in it and raise nearly Rs. 10,000 Crores, here’s why.
What Happened
The Government of India has been actively pursuing the divestment of its stake in various Public Sector Undertakings (PSUs) as part of its disinvestment strategy, aimed at achieving several goals, including reducing the fiscal deficit, promoting efficiency in PSU operations, and attracting private investments to enhance the performance.
As per the latest sources, the government of India has approved raising funds to the extent of Rs. 10,000 Crores by way of Qualified Institutional Placement, also the Department of Disinvestment and Public Asset Management (DIPAM) has received a mandate to sell a stake in the below 5 PSU banks through the Offer For Sale (OFS) route.
Government of India’s holding in 5 PSU Banks through the President of India
● Punjab & Sind Bank – 98.25%
● Indian Overseas Bank – 96.38%
● UCO Bank – 95.39%
● Central Bank of India – 93.08%
● Bank of Maharashtra – 79.60%
This aligns with the government’s obligation to meet the 25 percent minimum public shareholding norms within these PSU Banks in which it holds stake nearly worth ~Rs. 50,000 Crores by August 2026.
The fundraising will possibly be executed in one or more small tranches of Rs. 2,000 Crores each in these five banks.
Recent Divestments by the Government
The Union Ministry in November had proposed to sell upto 2.5 percent stake in Hindustan Zinc Limited a subsidiary of Vedanta Limited, through an Offer for Sale (OFS) with the floor price set at Rs. 505 per equity share.
In October the Indian Government had launched a two-day successful offer for sale to divest upto a 5 percent stake in Cochin Shipyard Limited with the floor price set at Rs. 1,540 per equity share.
Written by: Bharath K.S
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