A slew of public sector banks are looking to raise funds from the market taking advantage of the buoyant stock markets.
Punjab National Bank (PNB) and Bank of Maharashtra (BoM) are set to raise a combined Rs 10,000 crore through Qualified Institutional Placement (QIP) in this fiscal with the Union Ministry of Finance approving these fundraising plans, with each bank aiming to secure Rs 5,000 crore to bolster their capital base and meet regulatory requirements, according to reports.
This is in line with both banks’ broader strategy, as approved by their annual general meetings (AGMs), to raise Rs 7,500 crore each through QIP or follow-on public offers (FPO) during FY25.
Other banks
The Ministry of Finance has also received similar proposals from other public sector banks. Union Bank of India plans to raise Rs 6,000 crore, while UCO Bank and Indian Overseas Bank (IOB) each seek to raise Rs 2,000 crore via QIP. Additionally, the Central Bank of India has requested approval to raise Rs 3,000 crore this year.
This strategic move comes as public sector banks aim to reduce the government’s stake to comply with the Securities and Exchange Board of India‘s (SEBI) minimum public shareholding norms, which require listed companies to maintain at least a 25% public shareholding. Although SEBI has granted state-owned banks until August 2026 to meet these requirements, the current market conditions present an opportune moment to initiate the process.
PNB has already met SEBI’s guidelines, with the government’s stake reduced to 73.14%. However, BoM and other banks like the Central Bank of India, IOB, and UCO Bank still need to significantly lower their government holdings to comply with the norms.
