Centre to sell up to 3% stake in Indian Overseas Bank, eyes ₹2,100 crore

The Centre will sell a base tranche of 2 per cent, or about 385.1 million shares, with an option to offload an additional 1 per cent, or 192.5 million shares, through a green shoe option

The Centre plans to initiate an offer for sale (OFS) starting Wednesday of up to 3 per cent equity in state-owned Indian Overseas Bank (IOB), the Department of Investment and Public Asset Management (Dipam) confirmed on Tuesday.

 

What does the government plan to sell under the IOB OFS?

Under the plan, the government will sell a base tranche of 2 per cent, or about 385.1 million shares, with an option to offload an additional 1 per cent, or 192.5 million shares, through a green shoe option, the bank said in a BSE filing.

 

“Offer for sale in Indian Overseas Bank opens tomorrow for non-retail investors. Retail investors can bid on Thursday. Government offers to disinvest 2 per cent equity in the bank with an additional 1 per cent as a green shoe option,” said Dipam Secretary Arunish Chawla.

   

How much could the Centre raise from selling up to 3 per cent stake?

IOB shares ended 1.08 per cent lower at Rs 36.57 on the BSE on Tuesday. At the current market price, the Centre would be able to garner about Rs 2,100 crore by offloading up to 3 per cent stake in the bank.

 

What is the employee reservation in the OFS?

As part of the OFS, up to 150,000 shares, representing 0.001 per cent of the bank’s equity, may be reserved for eligible employees, subject to approvals. The bank said employees can apply for shares worth up to Rs 5 lakh.

 

Why is the stake sale linked to Sebi’s public shareholding norms?

The stake sale is aligned with the Securities and Exchange Board of India (Sebi) norms that mandate all listed companies, including those in the public sector, maintain a minimum public shareholding of 25 per cent. The deadline for compliance has been set at August 2026. The government currently owns 94.61 per cent of the Chennai-headquartered lender.

 

Which other PSU banks still have government shareholding above 75 per cent?

The sale comes nearly two weeks after the Centre offloaded a 6 per cent stake in Bank of Maharashtra, reducing its shareholding in the lender to below 75 per cent. Besides Indian Overseas Bank, the government’s shareholding remains above the mandated threshold in Punjab & Sind Bank (93.9 per cent), UCO Bank (91 per cent), and Central Bank of India (89.3 per cent).