The government is planning to pare stakes in five public sector banks through the QIP (qualified institutional placement) route as part of the exercise to meet the minimum 25% public shareholding regulatory norm.

UCO Bank, Bank of Maharashtra, Central Bank, Punjab & Sind Bank and Indian Overseas Bank are the five lenders which will carry out the capital raising plans to cut government shareholding to maximum 75%.

Each bank is expected to raise Rs 2,000 crore or above through QIPs in small tranches starting Q4FY25.

The government is also looking to dilute its shareholding in these banks through offer for sale to gradually adhere to the regulatory norm of maintaining public shareholding at minimum of 25%.

As per the extended deadline, state-owned banks have to raise public shareholding to a minimum 25% by August 2026.

As of 31 December, the government held a stake of 79.6% stake in Bank of Maharashtra, 98.25% stake in Punjab & Sind Bank, 96.38% stake in Indian Overseas Bank, 95.39% stake in UCO Bank and 93.08% stake in Central Bank.

The government’s excess stake in these banks, based on current market prices, is estimated to be worth nearly Rs 50,000 crore. 

Bank of Maharashtra managing director and CEO Nidhu Saxena said the lender may raise Rs 2,500 crore through the QIP route in FY26 to bring down the government shareholding. 

On 5 October, Bank of Maharashtra raised Rs 3,500 crore through QIP. The shareholding of the government accordingly fell from 86.46% to 79.60% as of 31 December 2024.