The Indian government is preparing to sell its stake in four public sector banks, including Punjab & Sind Bank. After this, 25% of the banks' shares will be held by the public. This sale will be entirely dependent on market conditions.
Government Stake Reduction
The government plans to reduce its stake in Central Bank of India, UCO Bank, Punjab & Sind Bank, and Indian Overseas Bank to 75%. Market regulator SEBI regulations require the public to hold at least 25% of shares in listed companies. Since the government holds a significant stake in these banks, the shares will be sold through an offer for sale (OFS) to comply with the regulator's 25% minimum public shareholding requirement. Additionally, the banks can also raise funds themselves from the market.
1. Central Bank of India
The government holds approximately 81.19% of the shares in Central Bank of India Limited. Since SEBI regulations limit the government's stake to a maximum of 75%, the government would need to sell approximately 6.2% of its stake in the bank to reduce its current 81.19% stake to 75%. Both institutional and retail investors can participate in the OFS, while the bank's QIP (Qualified Institutional Placement) will be open only to institutional buyers.
2. UCO Bank
The government holds approximately 90.95% of UCO Bank's stake. Therefore, it needs to sell approximately 16% of its stake. It is expected that this stake will be sold through both OFS (Offer for Sale) and QIP (Qualified Institutional Placement) routes.
3. Punjab and Sindh Bank
The government holds approximately 93.85% stake in Punjab & Sind Bank and needs to sell approximately 19%. On Friday, Punjab & Sind Bank shares were trading at ₹18.21, down 10.52% from its previous close of ₹20.35. The stock opened at ₹20.37 in its last trading session and touched a high of ₹20.39 during the day before closing at ₹19.61. The company's market capitalization currently stands at ₹12,949 crore.
4. Indian Overseas Bank
The government holds a 92.44% stake in Indian Overseas Bank. Under SEBI's minimum public shareholding norms, the government would have to reduce its stake in the bank by approximately 17.44%.
