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PSB Stake Sale Plan: Five Banks and SEBI’s 25% Norm

26 February 20251 min read
BANKING & FINANCEPSB Stake SalePlan: Five Banksand SEBI’s 25%Norm26 February 2025safalsetu.com

Why in the news

The Government is drawing up a four-year roadmap to sell stake in five public sector banks so they meet SEBI’s minimum public shareholding (MPS) rule, in consultation with DIPAM, DFS and the banks.

Key facts

  • SEBI norm: 25% public shareholding; PSBs have a waiver until August 2026.
  • Sales will be staggered over four years, guided by market conditions.
BankGovt holdingTo be sold
Punjab and Sind Bank98.25%23.25%
Indian Overseas Bank96.38%21.38%
UCO Bank95.39%20.39%
Central Bank of India93.08%18.08%
Bank of Maharashtra86.46%11.46%

Routes

  • Offer for Sale (OFS): Government sells existing shares and gets the money; the preferred route as PSBs are well capitalised.
  • Qualified Institutional Placement (QIP): bank issues fresh shares to institutions and raises funds itself.

Significance

  • Better liquidity in PSB stocks, revenue for the Government, and SEBI compliance by August 2026.

Exam angle

  • Terms: MPS, OFS, QIP, DIPAM.

Test yourself

1. What minimum public shareholding does SEBI require from listed companies, as cited in the PSB stake sale plan?

SEBI's MPS norm is 25% public shareholding.

2. Which route did officials prefer for the PSB disinvestment: one where the Government sells its existing shares?

OFS lets the Government sell existing shares and raise funds directly.

3. Which of the five PSBs in the stake-sale plan has the highest government holding?

Punjab and Sind Bank stands at 98.25%.

This topic is part of Daily Current Affairs 26 February 2025 (13 topics).

All topics of the dayDay quizFebruary 2025

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