Four PSBs seek 1-year extension to comply with shareholding norms

As per SEBI norms, listed entities must reduce promoter shareholding to 75 per cent

At least four public-sector banks (PSBs) — Indian Overseas Bank, UCO Bank, Punjab & Sind Bank, and Central Bank of India — have approached the Department of Financial Services (DFS), seeking a one-year extension to meet the Minimum Public Shareholding (MPS) requirement. These banks have expressed their inability to meet the current deadline of August 2026 via the qualified institutional placement (QIP) route.

 

According to Sebi norms, listed entities must reduce promoter shareholding to 75 per cent. Of the 12 PSBs, seven have already met the MPS norms.

 

The current government holdings in the five PSBs are: Indian Overseas Bank (94.61 per cent), Uco Bank (90.95 per cent), Punjab & Sind Bank (93.85 per cent), Central Bank of India (89.27 per cent), and Bank of Maharashtra (79.6 per cent). According to Sebi, all listed companies must maintain an MPS of 25 per cent.

 

 “Five PSBs still need to meet the requirements set by Sebi (Securities and Exchange Board of India). Among them, Bank of Maharashtra is likely to comply by the end of this year, as it has less than 5 per cent stake left to dilute. The remaining four, however, need to offload over 10 per cent. Given current market conditions, they have requested an additional year to complete the process,” a senior official said.

 

Emails sent to the five PSBs and the finance ministry didn’t elicit any response until press time.

 

When a public-sector unit raises funds through QIP, the money goes directly to the state-owned company as it involves issuance of new shares. In the case of offer for sale (OFS), the money raised goes to the government as it involves sale of existing shares. However, both methods lead to dilution of the government's stake.

 

In a QIP, the funds raised go directly to the state-owned entity, as it involves the issuance of new shares. In the case of offer for sale (OFS), money raised goes to the government as it involves sale of existing shares. Both routes result in dilution of the government's stake.

 

The official said the banks cited market conditions and their preparedness-related challenges. The DFS is likely to take up the matter with the markets regulator, in consultation with the Department of Investment and Public Asset Management (Dipam), the official added.

 

"Many of the PSBs received significant equity contributions from the government of India during the days when the NPAs (non-performing assets) were high and they were suffering losses. Now that the banks have become strong and profitable, they can garner equity from independent sources. This also diversifies the resource profile. Fresh equity provides growth capital and helps them in their business,” said Sanjay Agarwal, director at CARE Ratings.

 

In February, the finance ministry floated a request for proposal (RFP) to dilute its equity in select PSBs and listed public financial institutions (PFIs) via the OFS route by invitiong bids from merchant bankers and legal advisors for a period of three years.

 

In May, Dipam Secretary Arunish Chawla had said about a dozen merchant bankers had been empanelled for these transactions. “This year, we will adopt a strategy of regular OFS in small tranches,” he added. 

Source: Banks