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Govt decreasing its stake in 5 Public Sector Banks


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Bank of Maharashtra, along with Indian Overseas Bank (IOB) and three other public-sector undertakings (PSUs), are planning to reduce their government stake to less than 75 percent. This move is in order to comply with the minimum public shareholding (MPS) norms set by the Securities and Exchange Board of India (SEBI), the capital markets regulator in India.

Compliance with MPS Norms

Out of the 12 public sector banks (PSBs), four were already complying with the MPS norms as of March 31, 2023. Additionally, three more PSBs have complied with the minimum 25 percent public float during the current financial year. The remaining five PSBs have laid out action plans to meet the MPS requirement by August 2024.

Current Government Holdings

Currently, the government holds a majority stake in several PSBs. The government holding in Punjab & Sind Bank is 98.25 percent, followed by Indian Overseas Bank at 96.38 percent, UCO Bank at 95.39 percent, Central Bank of India at 93.08 percent, and Bank of Maharashtra at 86.46 percent.

  • State Bank of India: 57.59%
  • Canara Bank: 62.93%
  • Bank of Baroda: 63.97%
  • Punjab National Bank: 73.15%
  • Indian Bank: 79.86%
  • Bank of India: 81.41%
  • Union Bank of India: 76.99%
  • Bank of Maharashtra: 90.90%
  • Central Bank of India: 93.08%
  • UCO Bank: 95.39%
  • Indian Overseas Bank: 96.38%
  • Punjab and Sind Bank: 98.25%

These figures represent the percentage of ownership that the Indian government holds in these nationalized banks. The government’s significant shareholding in these banks is aimed at ensuring stability, control, and effective governance in the banking sector.

SEBI’s Minimum Public Shareholding Requirement

According to SEBI, all listed companies, including PSBs, must maintain a minimum public shareholding (MPS) of 25 percent. However, SEBI has given a special extension to state-owned banks, allowing them until August 2024 to meet this requirement. PSBs have various options to bring down the government stake, including a follow-on initial public offering (IPO) or a Qualified Institutional Placement (QIP).

In conclusion, Bank of Maharashtra, along with other PSBs, is planning to reduce the government stake to comply with SEBI’s minimum public shareholding norms. This move is in line with SEBI’s requirement for all listed companies to maintain an MPS of 25 percent. The PSBs have until August 2024 to meet this requirement, and they have various options to bring down the government stake.

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