PSU Bank Stocks Spike On News Of Government Mulling QIP To Dilute Stake

Stocks of five public sector undertaking banks spiked on the bourses in the final hour of trading on Tuesday, as news emerged that the government is mulling over dilution of stake in these lenders through qualified institutional placements.

The government has given the nod to at least five PSU lenders to raise funds from large institutions through the QIP route, the persons privy to the development told NDTV Profit.

The stake sale is aimed at achieving the regulatory compliance of minimum 25% public shareholding, the persons said. This means that the promoter entity, which in case of the PSUs is the government, has to reduce its overall holding to 75% or less.

The PSU banks which may launch QIP include Punjab & Sind Bank, Indian Overseas Bank, UCO Bank, Central Bank of India, and Bank of Maharashtra, news agency Bloomberg reported, citing sources.

Shares of the five PSU banks clocked a double-digit rise after the news of potential QIP emerged. Central Bank of India's scrip climbed the most, at around 15%, followed by Indian Overseas Bank rising by about 14%, and UCO Bank by 12.3%.

The shares of Bank of Maharashtra and Punjab & Sind Bank rose by around 10%.

Notably, the PSU banks have been edging lower on the bourses over the past couple of months, in line with the overall downturn seen in the market.

In the last one-year period, Bank of Maharashtra's shares are up by a modest 4.6%, Central Bank of India by around 7%, UCO Bank by 8.6%, Punjab & Sind Bank by 6.5%. However, Indian Overseas Bank's stock has logged a growth of over 20%.

In Bank of Maharashtra, the government cumulatively held a 79.6% stake till the end of December quarter, as per the shareholding data available with the exchanges.

In Central Bank of India, the government's shareholding stood at 93.08%, whereas it was even higher at 98.25% in Punjab & Sind Bank as of Dec. 31, 2024.

In UCO Bank and Indian Overseas Bank, the government's shareholding stood at 95.39% and 96.38%, respectively.