According to a government source, the Union finance ministry is thinking of selling minority shares in four state-owned banks: Punjab and Sind Bank, Indian Overseas Bank, UCO Bank, and Central Bank of India.
Union Finance Ministry Thinking of Selling Minority Shares in Four Banks
The goal of this decision is to comply with the public shareholding regulations set forth by the Securities and Exchange Board of India (Sebi).
After the cabinet gives its permission, the ministry will take specific action.
Government-owned businesses are exempt from Sebi’s requirement that listed corporations maintain a minimum of 25% public shareholding (MPS) until August 2026.
Government’s Stocks in The Four Banks
According to the Bombay Stock Exchange (BSE), the government now has sizable shares in four banks: roughly 93% in Central Bank of India, 95.4% in UCO Bank, 98.3% in Punjab and Sind Bank, and 96.4% in Indian Overseas Bank.
Following changes to the Securities Contracts (Regulations) Rules in 2010, Sebi’s MPS requirements mandate that listed companies own at least 25% of their shares in the public company.
The deadline for central public sector firms and financial institutions to comply with MPS standards was extended until August 2026 by a July 2024 amendment to the statute by the central government.
Public sector businesses with less than 25% public shareholding are excluded until August 1, 2026, under rule 19A of the Securities Contract (Regulation) Rules, 1957, according to a notification from the finance ministry. This gives them time to meet the requirement.
No More Bank Mergers
In May 2024, It was reported that the center is not currently considering any merger of government banks as now they want to move forward with the target of privatization of public sector banks.
So, the government will not merge these banks, instead privatize them. They are planning to start working on this scheme from the beginning of the financial year 2025. So far almost 15 banks have merged in the country since 2017 and with this there were 27 public sector banks which are now reduced to 12.
But, in its new plan, the government will not merge them, instead is making a new plan to make the banking sector strong and convenient.
