Centre to meet required shareholding norms for Bank of Maharashtra via QIP route in FY26
Summary
- Similar plans are in place for other PSBs, but meeting the shareholding norms may take some time for them
New Delhi: The Centre is planning a qualified institutional placement (QIP) for Bank of Maharashtra to reduce its stake below 75% in keeping with public float norms, with the sale expected to conclude by FY26-end, two people aware of the matter told Mint.
The move is part of a phased divestment strategy aimed at reducing government holdings in public sector banks (PSBs) that currently do not meet the Securities and Exchange Board of India’s (Sebi) requirement of at least 25% public shareholding in listed companies.
“The QIP for Bank of Maharashtra will help move closer to compliance with Sebi norms," the first person mentioned above said, requesting anonymity. “Similar plans are in place for other PSBs, but meeting the shareholding norms may take some time for them."
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The person added that while the Centre aims to reduce its stake in four other banks exceeding the 75% limit—likely through QIPs in FY26—the process may extend over the next few years.
“There are no plans to conduct multiple QIP rounds for the same bank in a single financial year," the person added.
Interestingly, while the government has allowed PSBs to pursue equity dilution and their market offers strategically during 2025-26, initial share sales are likely to range from 5% to 10% of paid-up capital and further share sales staggered over the coming years.
The Centre has in recent years opted for QIPs as the preferred route for equity dilution in PSBs, allowing it to attract institutional investors.
To be sure, market regulator Sebi, which mandated a 25% minimum public shareholding for all listed companies in August 2024, granted PSBs time until August 2026 to comply with the rule, while giving Life Insurance Corp. of India (LIC) until 16 May 2027 to reach 10% public shareholding.
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As of April 2025, seven of the 12 PSBs—State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Indian Bank, Union Bank of India and Bank of India—had met Sebi’s minimum public shareholding requirement.
At the end of the quarter ending 31 March, the government owned 89.27% of Central Bank of India, 79.60% of Bank of Maharashtra, 90.95% of UCO Bank, 94.61% of Indian Overseas Bank and 93.85% of Punjab & Sind Bank.
“The Centre is likely to need a few more years to meet shareholding norms, as per the Sebi requirements for Central Bank of India, UCO Bank, Indian Overseas Bank and Punjab & Sind Bank," the second person mentioned above said, requesting anonymity.
The person said there are no current plans for a direct market sale via an offer for sale or a public offering for any PSB, adding that the government may seek more time to comply with the Sebi norms if needed.
A spokesperson for the ministry of finance did not respond to emailed queries.
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State-run lenders have previously raised capital through QIPs, but in 2025-26, the process is expected to be more structured, with banks undertaking larger capital-raising exercises.
The government’s shares that must be sold in the five PSBs mentioned above to meet the minimum public shareholding are valued at over ₹50,000 crore at current market prices, with Indian Overseas Bank alone accounting for around ₹20,000 crore.
