Shares of five public sector banks Central Bank of India, Indian Overseas Bank (IOB), UCO Bank, Punjab & Sind Bank (PSB), and Bank of Maharashtra (BOM) were in sharp decline during today’s trade on Wednesday.
- Central Bank of India: Down 6% at ₹51.55.
- IOB: At ₹50.10 after 7% decline.
- UCO Bank: Down over 6% at ₹42.34.
- Punjab & Sind Bank: Down over 5% at ₹45.49.
- Bank of Maharashtra: Trading at ₹50.69, down over 4%.
Reason for decline: Government’s decision to sell stake
According to media reports, the central government has planned to sell its stake in these banks.
- Fund raising plan:
The government has approved raising ₹10,000 crore through the Qualified Institutional Placement (QIP) route. - Beginning of the process:
The fund raising process will begin in a phased manner in the fourth quarter of the current financial year. - DIPAM order:
The Department of Disinvestment and Public Asset Management (DIPAM) has been directed to sell stake in these banks through the Offer for Sale (OFS) route. - Government’s goal:
To meet 25% minimum public shareholding norms in these banks by August 2026.
Important meeting of Finance Ministry on Wednesday
Today the Finance Ministry has called a meeting of heads of public sector banks (PSBs). The progress of financial inclusion schemes will be reviewed in this meeting.
Meeting Agenda:
- Discussion on the progress of key financial inclusion programs like Pradhan Mantri Jan Dhan Yojana (PMJDY) and Mudra Yojana.
- Review of PM Swanidhi Yojana and other inclusion schemes.
- The meeting will be chaired by Financial Services Secretary M. Nagaraju.
- Representatives of private sector banks will also participate in this meeting.
Effect of selling government stake
After the government’s announcement of stake sale, concerns about PSU bank shares have increased among investors.
- Investors’ reaction:
Investors believe that stake sale may increase pressure on these banks, due to which their shares are seeing a decline. - Future Expectation:
The government aims to ensure market transparency by increasing public participation. However, this could lead to volatility in stocks in the near term.
