Indian Government Progresses with Stake Sale in Central Bank of India to Meet SEBI Regulations.....

To align with the Securities and Exchange Board of India's (SEBI) directive mandating a minimum public shareholding of 25% for listed entities, the Indian government is actively pursuing the dilution of its stake in several public sector banks, including Central Bank of India. Photo: Financial Express.

As of May 2025, the government holds approximately 89.65% in Central Bank of India, significantly exceeding the regulatory threshold. The government intends to lower its holding below 75% through a strategic combination of Offer for Sale (OFS) mechanisms and Qualified Institutional Placements (QIP) by the stipulated deadline of August 2026.

QIP Details....

The Central Bank of India Ltd announced that it has initiated its Qualified Institutional Placement (QIP) on March 24, 2025, after receiving the necessary approvals from its Board and shareholders. The bank had established a floor price of ₹42.62 per share, calculated in accordance with SEBI's pricing formula.

In line with regulatory guidelines, the bank is permitted to offer a discount of up to 5% off the floor price. The final issue price wasp determined in collaboration with the book-running lead manager.

Evolving Institutional Investor Interest:

During the January-March 2025 quarter, Central Bank of India experienced a notable surge in interest from institutional investors. Foreign Institutional Investors (FIIs) increased their stake from 0.98% in the preceding quarter to 1.55%. Similarly, Domestic Institutional Investors (DIIs) augmented their holdings from 3.57% to 4.89%. Mutual funds also demonstrated increased confidence, raising their stake from 0.18% to 0.29%. This upward trend in institutional investment underscores a growing positive outlook on the bank's future prospects.

Positive Market Outlook:

This strategic move by the government is integral to a larger initiative aimed at bolstering liquidity, enhancing transparency, and improving governance standards within public sector banks. The increasing participation of both FIIs and DIIs reflects a strengthening investor sentiment. Coupled with the Reserve Bank of India's accommodative monetary policy and India's robust economic growth, projected at 6.8% for the fiscal year 2025-26, Central Bank of India is well-poised to achieve a more prominent market position and realize substantial long-term growth.

The Indian Banking Sector:

India’s banking sector, under the stringent oversight of the Reserve Bank of India (RBI), remains resilient, well-capitalized, and stable. The RBI, globally recognized for its robust regulatory framework, enforces strict capital adequacy norms, liquidity buffers, and prudent lending practices. Through periodic stress tests, the central bank ensures banks can effectively withstand economic shocks. This vigilant regulation has fortified the financial system, maintaining its security even during periods of economic uncertainty.