Sebi may help in government's recapitalisation plans for PSBs

It has infused Rs 22,915 cr capital in 13 lenders to revive loan growth that hit a two-decade low, help them shore up capital base

To help push government’s recapitalisation drive for public sector banks (PSBS), the Securities and Exchange Board of India (Sebi) may grant a waiver to state-run entities in case public shareholding falls below 25 per cent and exempt them from open offer if they raise holding by more than five per cent in one financial year.

The central government plans to allocate Rs 70,000 crore spread over four years towards recapitalisation of PSBs to contain risks in the banking industry.

It has already infused Rs 22,915 crore in 13 lenders, including State Bank of India and Indian Overseas Bank, to revive loan growth that has hit a two-decade low and help them shore up their capital base.

The infusion, part of the broader recapitalisation move, will increase in some cases shareholding of the promoter, that is government, beyond 75 per cent, the limit set by the market regulator.

In other cases, promoter holding may go up by more than five per cent in one financial year, which would trigger an open offer.

The likely waiver is aimed at providing the government an escape route from the mandatory requirements, sources said.

Sebi has exempted the government from making open offers to shareholders of several state-run firms following funds infusion that increased the government holding in the public sector undertaking entities.

The regulator had exempted several PSBs such as Allahabad Bank, United Bank of India, Corporation Bank, Dena Bank and Bank of India, among others.