PSU Banks likely to receive two-year extension for MPS compliance

PSU Banks extension: Public sector banks are anticipated to receive an additional two-year extension to meet the Securities and Exchange Board of India's (Sebi) minimum public shareholding (MPS) norms, according to a senior government official.

Of the 12 public sector banks (PSBs), five have yet to comply with the MPS requirement, with the government's stake exceeding 75 per cent.

Sebi mandates that all listed companies maintain a minimum public shareholding of 25 per cent. The regulator had granted state-owned banks a special extension until August 2024 to fulfil this requirement.

"We have written to the Department of Economic Affairs for the extension," Financial Services Secretary Vivek Joshi told PTI in an interview. He noted that typically, a two-year extension is granted and is expected to be approved soon.

Currently, five banks have a public shareholding of less than 25 per cent. The government holds 98.25 per cent of Delhi-based Punjab & Sind Bank, 96.38 per cent of Chennai-based Indian Overseas Bank, 95.39 per cent of UCO Bank, 93.08 per cent of Central Bank of India, and 86.46 per cent of Bank of Maharashtra.

It is projected that the government's stake in the Bank of Maharashtra could fall below 75 per cent during the current fiscal year, Joshi stated. However, the banks will decide on share sales through Qualified Institutional Placement (QIP) or other routes based on their capital requirements.

Each bank will evaluate market conditions and make decisions in the best interests of their shareholders, Joshi added.

Regarding the Budget announcement of the financial sector vision and strategy document, Joshi said it would be led by the Department of Economic Affairs (DEA) and released within the current fiscal year.

"The strategy for Vision 2047 will be included in this document. For instance, the number of banks needed for a developed India and how many global banks like SBI and ICICI Bank will be required by 2047.

"We need a strategy to modernise regulations and anticipate changes where banks will function as both banking and information technology companies," he said.

The Department has already made some progress, and legislative review is another significant area, he added. The document is expected to be finalised within this financial year.

(With PTI inputs)