The government plans to raise around ₹13,000 crore through a 8-10% coordinated offer for sale (OFS) in Punjab & Sind Bank, UCO Bank and Indian Overseas Bank to meet the minimum public shareholding norms prescribed by the Securities and Exchange Board of India. According to reports from Mint, the government's shareholding in these banks stands at 93.85%, 92.44% and 90.95% respectively. The Centre recently raised ₹2,266.13 crore by diluting 8.08% stake in Central Bank of India through an OFS, and as of 18 June, the Centre has mobilized ₹13,389.42 crore through disinvestment in FY27 and needs to raise another ₹66,610.58 crore to meet its annual target.
Sebi mandates a minimum public shareholding of 25% for all listed companies under Regulation 38 of the Listing Obligations and Disclosure Requirements (LODR) Regulations. As reported by Mint, while public sector banks and undertakings have been granted extensions over the years, the latest relaxation from penal action is valid until September 2026. Non-compliance can attract penalties, including fines and freezing of promoter shareholdings. The planned stake sale comes as the government expects to overshoot its disinvestment target of ₹80,000 crore for FY27, a first after consistently falling short of disinvestment goals in the post-pandemic period.
According to Mint, shares of Punjab & Sind Bank, UCO Bank and Indian Overseas Bank declined 1.3%, 0.99% and 1.01% respectively on Thursday on the National Stock Exchange. Sanjay Agarwal, senior director at CareEdge Ratings, stated that the proposed OFS-led stake dilution should be viewed as a structural reform rather than a mere divestment exercise. He noted that the timing appears favourable given the significant improvement in PSBs' profitability, asset quality and capital position over the past few years.
As reported by Mint, PSBs have reported a sharp improvement in asset quality with their gross non-performing asset (GNPA) ratio declining to 1.93%, while the net NPA ratio fell to 0.39%, among the lowest levels recorded by the sector. The sector's aggregate operating profit reached ₹3.21 trillion, while net profit rose 11.1% year-on-year to a record ₹1.98 trillion, marking the fourth consecutive year of profitability for PSBs. The sector's capital position remained strong with aggregate capital adequacy ratio (CRAR) improving to 16.6%, well above the regulatory requirement of 11.5%.
