The central government is considering permitting at least four state-owned banks to raise funds or expand their public float in the first half of the next financial year (FY25) to boost their lending activities and increase public participation, according to a report by The Economic Times (ET).
The government has reportedly received a proposal from the Central Bank of India for an offer for sale, with the government currently holding a 93.08 per cent stake in the state-owned lender. Additionally, some banks may have already received approvals from their boards while others are preparing their fundraising proposals.
PNB informed ET that the bank’s board has already approved a proposal to raise Rs 7,500 crore in equity capital in FY25. The bank had planned to raise funds in the first half of the next fiscal through an FPO or Qualified Institutional Placement (QIP).
In India, there are 12 public sector banks (PSBs). This includes State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda, Bank of India (BOI), Central Bank of India, Canara Bank, Union Bank of India, Indian Overseas Bank (IOB), Punjab & Sind Bank, Indian Bank, UCO Bank, and Bank of Maharashtra
The government has ownership that surpasses 80 per cent in six state-run banks, including BOI, IOB, Punjab & Sind Bank, Bank of Maharashtra, Central Bank of India, and UCO Bank.
State-run lenders collectively posted total profits of Rs 33,643 crore in the second quarter of FY24, maintaining profitability in the third quarter despite provisions for wage revisions and increased deposit costs affecting net interest margins.
The government, in its recent projections, anticipates a dividend income of Rs 1.02 trillion from the Reserve Bank of India (RBI) and public sector financial institutions in the next financial year. The current fiscal year estimate for dividend income is expected to exceed the Budget Estimate, primarily due to the RBI paying a higher dividend of Rs 87,416 crore in May last year. In the previous financial year, the government mobilised Rs 39,961 crore from RBI and public sector financial institutions.
First Published: Feb 06 2024 | 10:16 AM IST