In a major push towards banking sector reforms and disinvestment, the government is set to expedite the process of selling its stake in public sector banks (PSBs), stated a report by CNBC Awaaz citing sources. It further maintained that the appointment of merchant bankers to oversee the transactions is in the final stages, indicating the process is gaining momentum.
According to the sources who spoke to CNBC Awaaz, the government is planning to sell up to 20 per cent stake in five public sector banks (PSBs) namely, UCO Bank, Bank of Maharashtra, Central Bank of India, Punjab & Sind Bank, and Indian Overseas Bank (IOC), over the next six months. The stake sales will be executed through Qualified Institutional Placement (QIP) and Offer for Sale (OFS) routes.
For instance, in the case of UCO Bank, Centre is targeting to raise Rs 2,500 crore by selling up to 10 per cent stake. The funds that will be raised by selling stakes in the PSBs will be used to meet the capital and operational requirements of the respective banks.
This move is part of the government’s strategy to strengthen the balance sheets of state-owned banks while also reducing its direct ownership.
Earlier, Finance Minister Nirmala Sitharaman in her 2021-22 Budget speech had also announced the government’s intention to take up privatisation of two PSBs, besides IDBI Bank.
As of end-September, the Indian government owns more than 93 per cent in Central Bank of India, 96.4 per cent in Indian Overseas Bank, 95.4 per cent in UCO Bank and 98.3 per cent in Punjab and Sind Bank, according to data on the BSE’s website.
Per the Securities and Exchange Board of India (SEBI), listed companies are required to maintain a 25 per cent public shareholding, however it has exempted government-owned firms from meeting these norms till August 2026.