The Government of India has decided to exercise the oversubscription option in the ongoing offer for sale (OFS) of Central Bank of India, raising the total issue size from 4% to 8% of the bank's equity capital amid strong investor interest. According to reports from The Economic Times, the issue was subscribed 2.36 times receiving share bids of 76.86 crore at a price of ₹31.22 per share versus the floor price of ₹31 per share. The PSU lender's filing to the exchanges on Friday confirmed that the Department of Financial Services under the Ministry of Finance has expressed its willingness to now sell up to 72.41 crore equity shares of the public sector lender, representing 8% of the bank's total paid-up equity share capital. The government held 89.27% in the bank as of end March, and the 8% divestment plan includes a 4% dilution through green shoe option.
The OFS opened for non-retail investors on May 22, while retail investors and eligible employees can bid on May 25. As reported by The Economic Times, out of the total offer size, around 7.24 crore shares, equivalent to 10% of the issue, have been reserved for retail investors, subject to valid bids. The stake sale is part of the government's broader disinvestment and public shareholding compliance strategy for state-run banks, with the move expected to improve liquidity in the stock and help the lender meet minimum public shareholding norms over time. About 0.1% of the total issued and paid-up equity share capital will be offered to employees.
Despite the government's stake sale, Central Bank of India shares plunged 7.7% Friday to ₹31.30 on BSE as investors reacted to the divestment process. According to The Economic Times, the stock price has declined 15% over a one-year period, reflecting the current market sentiment toward the PSU lender. However, the bank reported strong annual performance with net profit standing at ₹4,369 crore, representing a 15.4% growth. Its gross advances grew 19% to ₹3.45 lakh crore, demonstrating healthy business expansion. The bank would need to reduce government holding further to comply with SEBI's rule of minimum 25% public holding.
