The finance ministry may approach markets regulator Sebi to seek relaxation on the minimum 25 per cent public shareholding norm for some public sector banks (PSBs). There are 13 PSBs including IDBI Bank, Bank of India in which the government holding is more than 75 per cent.
If these banks are unable to meet the norm by August deadline, the Department of Financial Services will have to approach the Securities and Exchange Board of India (Sebi) for exemption, sources said. Listed public sector undertakings (PSUs), including banks, have already been provided one year extension till August 21 to comply with the norms. Due to successive capital infusion in the NPA-ridden PSBs, the government holding in them has increased and the public float deferred in the last two years.
While the government holding in United Bank of India is the highest at 93.13 per cent, government holding in another Kolkata based lender UCO Bank stands at 90.80 per cent. Government’s stake in Indian Overseas Bank is 89.74 per cent, Bank of Maharashtra (87.01 pc), IDBI Bank (85.96 pc), Punjab and Sind Bank (85.56 pc), Bank of India (83.09 pc), Dena Bank (80.74 pc) and Indian Bank (81.71 pc).
In Corporation Bank, it is 79.87 per cent, Central Bank of India (78.52 pc), Oriental Bank of Commerce (77.23 pc) and Andhra Bank (77.99 pc) are above the Minimum Public Shareholding (MPS) requirements. Many PSBs have lined up plans for raising capital from market which will result in increasing the public shareholding.
Together these banks plan to raise capital over Rs 50,000 crore during the current fiscal. Leading the pack is the Central Bank of India, which has already got shareholders’ nod for raising Rs 8,000 crore equity capital via a follow-on public offer, rights issue or a qualified institutional placement (QIP). Canara Bank also proposes to raise up to Rs 7,000 crore through various modes.
Bank of Baroda aims to mop up Rs 6,000 crore, while Syndicate Bank plans to access the capital market and raise equity capital of up to Rs 5,000 crore in one or more tranches. Several methods are available to listed companies to comply with the public float requirements.
These include issuance of shares to public; offer for sale; sale of shares held by promoters through secondary market institutional placement programme; rights issue to public shareholders; and bonus shares to public shareholders. Also, Qualified Institutional Placement (QIP) and sale of shares up to 2 per cent held by promoters or promoter groups in the open market through block and bulk deal can be done to achieve the minimum 25 per cent public float.
