India Considers Sale of Bank Stakes

The Indian government is contemplating the sale of minority stakes in four state-run banks—Central Bank of India, Indian Overseas Bank, UCO Bank, and Punjab and Sind Bank—to comply with public shareholding norms set by the Securities and Exchange Board of India (SEBI). Currently, the government owns over 93% in these banks and plans to seek federal cabinet approval for the stake dilution in the coming months. The sale is expected to occur through an open market offer, as SEBI mandates a 25% public ownership but has exempted government-owned firms from this requirement until August 2026. The timing and scale of the sale will depend on market conditions, though it remains uncertain if the government will meet the SEBI deadline or seek an extension. Following the announcement, shares of the banks rose by 3% to 4%. In previous instances, public sector banks have utilized qualified institutional placements (QIPs) to raise capital and reduce government stakes.