The Indian Government is launching an Offer for Sale (OFS) in Indian Overseas Bank (IOB) to dilute its 92.44% stake. Earlier, the government has sold 8% stake in Central Bank of India. Several other Public Sector Banks (PSBs) are expected to follow next.
Indian Overseas Bank (IOB): The Central Govt is preparing to dilute its stake in IOB to comply with SEBI’s Minimum Public Shareholding (MPS) rule of 25%. IOB previously diluted a 2.17% stake in December 2025.
What is this rule of SEBI: SEBI’s Minimum Public Shareholding (MPS) rule requires every listed company in India to maintain at least 25% public shareholding. In simple words, Promoters (founders or the Government in the case of public sector companies) cannot hold more than 75% of the company’s shares.
Next in Line: After Indian Overseas Bank, the Govt may reduces its stake in Punjab & Sind Bank (where the government holds 93.85%) and UCO Bank (90.95%).
The government has approved capital raising and stake dilution plans for five public sector banks: Punjab & Sind Bank, Indian Overseas Bank, UCO Bank, Central Bank of India, and Bank of Maharashtra.
What is OFS: Offer for Sale (OFS) is a method through which the promoters of a listed company sell their existing shares to investors through the stock exchange. In an OFS, the company does not issue new shares. Instead, the promoter, such as the Government or the company’s founders, sells a part of their existing shareholding to the public. The money received from the sale goes to the promoter and not to the company. For example, if the Government owns 90% of a public sector bank and wants to reduce its stake to comply with SEBI’s Minimum Public Shareholding (MPS) rule, it can sell some of its existing shares through an Offer for Sale.
Govt shareholding in Banks
| Bank Name | Govt Stake (Dec 25) | Govt Stake (June 24) |
|---|---|---|
| State Bank of India | 55.50% | 57.54% |
| Canara Bank | 62.93% | 62.93% |
| Bank of Baroda | 63.97% | 63.97% |
| Punjab National Bank | 70.08% | 70.08% |
| Bank of India | 73.38% | 73.38 |
| Indian Bank | 73.84% | 73.84% |
| Union Bank of India | 74.76% | 74.76% |
| Bank of Maharashtra | 73.60% | 86.46% |
| UCO Bank | 90.95% | 95.39% |
| Central Bank of India | 89.27% | 93.08% |
| Indian Overseas Bank | 92.44% | 96.38% |
| Punjab & Sind Bank | 93.85% | 98.25 |
