Government Banks will raise Rs 25,200 crore in the current financial year from the equity market

Public sector banks (PSBs) have received approval from the finance ministry to raise ₹25,200 crore during the financial year 2024-25 through equity markets. This capital-raising initiative aims to support the growth plans of PSBs and ensure compliance with the regulatory requirement of maintaining a minimum public shareholding (MPS) of 25%.

As of now, PSBs have collectively raised ₹8,500 crore in FY25 through Qualified Institutional Placements (QIPs), as per data from Prime Database. This move is expected to bolster their financial position and align with regulatory mandates while driving further expansion.

The Central government is also planning to sell minority stakes in four state-run banks to comply with public shareholding norms set by the Securities and Exchange Board of India (SEBI), according to a government source.

India’s Banking System is also facing Liquidity Deficit and RBI has injected Rs.6,956 Crore into System. Liquidity deficit refers to a situation where there is a shortage of cash or funds in the banking system, meaning that banks collectively do not have enough liquid resources to meet their short-term operational and lending needs. Click here to read this news in detail.

Banks Under Consideration

The government may sell its stake in these four public sector banks:

• Central Bank of India
• Indian Overseas Bank
• UCO Bank
• Punjab and Sind Bank

The government aims to secure cabinet approval in the coming months for the sale, which is expected to be conducted through an offer for sale (OFS) in the open market.

Regulatory Compliance

As per SEBI regulations, listed companies must maintain at least 25% public shareholding. However, government-owned companies have been granted an exemption until August 2026. The source did not confirm whether the government would meet this deadline or seek an extension. Timing and sale volume will depend on market conditions.

Government Shareholding in Banks

The Government has following shareholding in Public Sector Banks:

• State Bank of India (57.54%)
• Punjab National Bank (70.08%)
• Bank of Baroda (63.97%)
• Canara Bank (62.93%)
• Union Bank of India (74.76%)
• Indian Bank (73.84%)
• Bank of India (73.38%)
• Central Bank of India (93.08%)
• Indian Overseas Bank (96.38%)
• UCO Bank (95.39%)
• Bank of Maharashtra (86.46%)
• Punjab and Sind Bank (98.25%)