Government equity in PSU banks 52%

Context

  • In a bid to align with the best corporate practices, the Finance Ministry has requested the public sector banks to regularly convey down the government’s equity to 52%.

Key highlights measured by CSO

  • “The government is actually a major shareholder. So, this should be aligned to the best corporate practices. The shareholding wants to come right down to no less than 52 per cent in the first phase. As and when market situation permits, banks will take step in that course. They’ve all of the permission in hand”.
  • Dilution of government stake will assist banks to fulfill 25 per cent public float norms of market regulator Sebi. A number of the public sector banks have government’s holding past 75 per cent.
  • Moreover, it is going to encourage the banks to comply with the prudential lending norms.
  • The nation’s largest lender State Bank of India (SBI) has already initiated step for Rs 20,000 crore share sale by certified institutional placement (QIP). Put up QIP, the government stake will be diluted from the present 58.53 per cent.

Rules of SEBI

  • A notification underneath the Securities Contracts Laws (Modification) Guidelines makes it obligatory for all listed entities to have a minimal public float of 25%.

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