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The Central government is working on a detailed plan to reduce its 20% stake in five public sector banks
Public Sector Bank Stake Sale
The Central government is working on a detailed plan to reduce its 20% stake in five public sector banks, Business Standard reported on February 26.
The strategy is being developed in collaboration with the Department of Investment and Public Asset Management (Dipam), the Department of Financial Services, and the public sector banks involved, according to the report.
This move aims to comply with the Securities and Exchange Board of India’s (SEBI) minimum public shareholding requirement. To achieve this, the government is expected to use a combination of Offer-for-Sale (OFS) and Qualified Institutional Placement (QIP) methods for the stake reduction, as per the report.
The banks targeted for stake dilution include Bank of Maharashtra, Indian Overseas Bank, UCO Bank, Central Bank of India, and Punjab and Sind Bank, with plans to reduce the government’s shareholding to below 75%.
On February 25, it was also reported that Dipam has called for bids from merchant bankers to assist in the stake sale process for public sector lenders and listed public financial institutions.
According to the Request for Proposal (RFP) issued by DIPAM, the selected merchant bankers will be empaneled for three years, with the possibility of a one-year extension, and will provide guidance on the timing and structure of the equity dilution for these banks and financial institutions.
