homeeconomy NewsBudget 2023: Public shareholding in most PSU banks remains below regulatory requirements

Budget 2023: Public shareholding in most PSU banks remains below regulatory requirements

Budget 2023: Public shareholding in most PSU banks remains below regulatory requirements
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By CNBCTV18.com Jan 31, 2023 9:52:41 AM IST (Published)

Among all state-run lenders, the government holds the least stake in the largest - State Bank of India.

Most state-run lenders continue to remain below the minimum public shareholding norms, despite the government's aggressive disinvestment drive and consolidation among some lenders.

The government aims to have 4-5 large state-run lenders as big as the country's largest State Bank of India. As of date, post the 2019 consolidation drive, there are seven large PSU banks and five smaller ones. The number of banks were brought down from 27 to 12 when 10 banks were merged into four. The merger came into effect in April 2020.

As the Union Budget 2023 approaches, discussions around privatisation of public sector banks have again cropped up as analysts expect the government to revive the disinvestment plans.

In Budget 2021, Union Finance Minister Nirmala Sitharaman had said that the government will sell stake in at least two PSU banks as part of its privatisation plan. However, that plan has not been put into effect till date and no information has been divulged on which banks the government was looking to sell stake in, and how much stake was being planned to be divested.

In this light, it would be interesting to see how much stake the Central government currently holds in all the listed PSU banks as of the latest quarter ending December 2022.

The Union government holds 57.5 percent stake in the country’s largest lender State Bank of India (SBI). This is the lowest stake the government holds in any PSU banks.

Bank of Baroda: The government owns 63.97 percent of the total paid-up equity of Bank of Baroda.

Canara Bank: The Central government holds 62.93 percent stake in Canara Bank. This has come down from 69.33 percent in the quarter ending June 30, 2021 when the bank raised Rs 2,500 crore through a QIP (qualified institutional placement) issue.

Punjab National Bank: The government currently owns 73.15 percent stake in Punjab National Bank (PNB). It was in November 2018 when the government had significantly increased its stake in the bank by 5.83 percent.

Indian Bank: The government holds 79.86 percent of the total paid-up equity of Indian Bank.

Union Bank of India: The government at present holds 83.49 percent stake in Union Bank of India. The company's management told CNBC-TV18 earlier this month that they are looking to raise funds through a QIP during the January-March period. Post the QIP, the government's stake will fall to 79 percent but still remain higher than the minimum public shareholding threshold.

Bank of India: The government owns 81.41 percent stake in Bank of India currently. The lender, too, had announced plans of raising Rs 2,500 crore by selling equity shares in April 2022 to bring the government shareholding to equal to or below 75 percent.

Central Bank of India: The government currently holds 93.08 percent stake in the Central Bank of India.

Bank of Maharashtra: The Government of India holds 90.97 percent stake in the Bank of Maharashtra. But, the holding is expected to come down to around 85 percent following the proposed share sale which will raise up to Rs 1,000 crore through a QIP issue during the January-March quarter.

UCO Bank: The government owns 95.39 percent stake in UCO Bank.

Indian Overseas Bank: The government holds 96.38 percent in Indian Overseas Bank. According to a media report, NITI Aayog in 2022 recommended the privatisation of Indian Overseas Bank and Central Bank of India, though there was no official announcement on the same.

Punjab and Sind Bank: The government’s stake in Punjab and Sind Bank currently is 98.25 percent, the highest among all PSU banks.

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