'Sebi may be asked to relax 75% promoter stake norm for PSBs'

With an aim to enable the further recapitalisation of public sector banks (PSBs), the Finance Ministry may seek a relaxation for PSBs in the market regulator Sebi`s norms for entities requiring promoters to have 75 per cent holdings in them, according to a senior official source. The Securities and Exchange Board of India (Sebi) listing norms mandate that every listed entity will maintain a minimum public shareholding of 25 per cent.  The government shareholding in many state-run banks is currently above 75 per cent. In case of their further recapitalisation, this will go up over 90 per cent in some cases and also touch 99 per cent.  In prevoius years, the government had taken Sebi approval for recapitalising PSBs which had pushed up the government`s stakes in these banks.  "We have taken permission from Sebi on having over 75 per cent government shareholding in PSBs in the past and if banks are further capitalised, we will do so again. Already the government stakes are above 75 per cent in many of the state run banks," the source said.

Asked if individual banks will take permission for exemption from Sebi`s 25 per cent public shareholding norm, the source said the ministry seeks the approval from the market regulator.  In fact, the government has plans to cut its shareholding in many PSBs to 52 per cent. Market condition, however, has so far not been suitable enough for banks to move in this direction, the source pointed out. Banks approaching the market to raise funds and cut government stake is a process in the pipeline, he added.  The country`s largest lender State Bank of India (SBI) has already initiated steps for Rs 20,000 crore share sale through qualified institutional placement (QIP). Post QIP, the government stake will be diluted from the existing 58.53 per cent. 

Many other banks are planning to raise capital through some means or other, depending on the market conditions. Some state-run lenders like Syndicate Bank, Union Bank of India, Punjab National Bank (PNB), and Oriental Bank of Commerce, among others, have already issued, or are in the process of announcing Employee Share Purchase Schemes (ESPS). The government shareholding is in PNB 75.41 per cent and in Bank of India it is 89.1 per cent. In the merged enitity of Bank of Baroda-Dena- Vijaya Bank, the government stake is 65.7 per cent on the basis of the share swap ratio.  In Canara Bank, the government stake in 72.55 per cent. Post allotment of the equity shares, the shareholding of the government has gone up to 79.41 percent in the Allhabad Bank. 

In Corporation Bank, the government stake in 93.5 per cent and in Bank of Maharashtra, it is 87.74 per cent. In Oriental Bank of Commerce, the government holds 87.58 per cent by. In Uco Bank, the government stake is 93.29 per cent. In Union Bank, the Finance Ministry holds 74.27 per cent. In United Bank of India, the government stake currently is 96.83 per cent. In Punjab and Sindh Bank, the Centre`s stake is 85.56 per cent. In state-run IDBI Bank, the promoters hold 97.46 per cent stake, as per BSE shareholding pattern of March 2019.