Government’s Plan for PSU Bank Stake Sale – The Indian government plans to sell up to 20% of its stake in five public sector banks (PSBs) over the next four years to comply with the Securities and Exchange Board of India’s (Sebi) minimum public shareholding norms. The norms require listed companies to have at least 25% of their shares held by the public.
Consultation and Planning – The government is working on this plan in consultation with the Department of Investment and Public Asset Management (DIPAM), the Department of Financial Services (DFS), and state-run banks.
Sale Methodology – The government will explore two main methods for the stake sale: Offer for Sale (OFS) and Qualified Institutional Placement (QIP). Market conditions will be considered in the process.
Banks Involved – The five public sector banks targeted for the stake reduction are:
Bank of Maharashtra
Indian Overseas Bank
UCO Bank
Central Bank of India
Punjab and Sind Bank
Merchant Bankers’ Role – DIPAM has invited bids from merchant bankers to assist with the stake sale. These bankers will be responsible for guiding the government on the timing and structure of the equity dilution process. The chosen merchant bankers will be hired for three years, with an option to extend their contract for one more year..
The government aims to bring its stake in each of these banks down to below 75% in a phased manner. On February 25, DIPAM also issued a Request for Proposal (RFP) to select merchant bankers for this task.