Business News / Government is going to reduce its stake in these 5 banks, this is the big reason

Business News: The government can reduce its stake in 5 public sector banks of the country. According to Finance Service Secretary Vivek Joshi, the government can reduce its stake by 75 percent in five public sector banks including Bank of Maharashtra, IOB and UCO Bank under SEBI's Minimum Public Share Holding i.e. MPS rules. Let us tell you, to comply with SEBI rules, the government is planning to reduce the government stake to less than 75 percent. Four out of total 12 public sector banks (PSBs) have followed these rules of SEBI by March 31, 2023.

The Finance Services Secretary said that four out of 12 public sector banks (PSBs) were complying with MPS norms as of March 31, 2023. Whereas during the current financial year, 3 more public banks have complied with the minimum 25 percent public float. The remaining five banks are planning to reduce government stake to meet the MPS requirement. Government's stake in these banks may soon reduce.

Who has how much stake?

At present, the government's stake in Delhi-based Punjab and Sindh Bank is 98.25 percent. Government's stake in Chennai's Indian Overseas Bank is 96.38 percent, in UCO Bank 95.39 percent, in Central Bank of India 93.08 percent, in Bank of Maharashtra 86.46 percent. According to SEBI, it is necessary for all listed companies to comply with public shareholding rules.

How long is the time?

However, the regulator has given special exemption to public sector banks. They have time till August 2024 to meet the rule of 25 percent public shareholding. Joshi said banks have several options to dilute stake, including follow-on public offering (FPO) or qualified institutional placement.

He said that depending on the market situation, each of these banks will take a decision in the best interest of the shareholders. Without giving any deadline, he said that efforts are on to fulfill this requirement.

Joshi said the Finance Ministry has directed all PSBs to review their gold loan portfolio as cases of non-compliance with regulatory norms have come to the notice of the government. The Department of Financial Services (DFS) has directed the heads of public sector banks to review their gold loan portfolio. By writing a letter, they have been asked to look into their system and procedures related to gold loan.