Public sector lender Indian Overseas Bank (IOB) is contemplating requesting the central government for an extension to lower its promoter stake to below 75%, CEO Ajay Kumar Srivastava informed FE. With August set as the deadline for five PSBs to meet the minimum public shareholding (MPS) norms, IOB, with the government holding a 96.38% stake as of March, faces the imperative to comply.
IOB’s board has approved raising Rs 5,000 crore during FY25 via equity to reduce the promoter stake. However, this is estimated to only lower the government’s stake to 83-84%. Srivastava emphasized the need to assess market appetite and the feasibility of offloading stake within one financial year before committing to the reduction.
Other PSBs, including UCO Bank, Bank of Maharashtra, and Central Bank of India, are also strategizing equity raises to meet MPS norms. UCO Bank plans to issue four billion equity shares through QIP and FPO in FY25 to lower the government’s stake from 95.39% to below 75%. Similarly, Bank of Maharashtra aims to raise up to Rs 7,500 crore via equity in FY25 to reduce the government’s stake from 86.46%.
Central Bank of India’s board has approved raising up to Rs 5,000 crore via equity and debt in FY25, with plans to further reduce the government’s stake through offer for sale (OFS) once government approval is secured.
The central government, holding 93.08% stake in Central Bank of India as of March, is also expected to extend the deadline for PSBs to meet MPS norms by another year, as reported earlier. If any PSBs do not require capital infusion, the government may consider selling a minority stake at an appropriate time.
Punjab & Sind Bank’s response to the impending MPS norms deadline could not be obtained immediately.
