Capital Raising Plans to Meet SEBI Norms
Speaking at CNBC-TV18’s Banking Transformation Summit on September 16, Nagaraju said four PSU lenders would raise capital this year to comply with the Securities and Exchange Board of India’s (SEBI) minimum public shareholding (MPS) norms. SEBI requires public shareholding to be at least 25%, but several state-run banks still have government ownership above 90%.
At the end of the June quarter, Indian Overseas Bank had 94.61% government stake, Punjab and Sind Bank 93.85%, UCO Bank 90.95%, and Central Bank of India 89.27%. Recent Qualified Institutional Placements (QIPs) of ₹1,500–2,000 crore each led to negligible dilution of government shareholding, highlighting the need for larger fundraising rounds.
Government’s Commitment to Majority Ownership
Nagaraju emphasized that the Centre has no proposal to reduce its stake below the majority threshold. “They will continue to be majority-owned by the government, because there is a public interest in the government owning a majority in public sector banks,” he said. The assurance helped lift investor sentiment, with PSU bank shares trading up to 1% higher on Wednesday morning.
Credit Growth and Lending Outlook
The DFS secretary also highlighted strong credit growth fueled by last year’s profits and favorable economic conditions. “We are very confident, given the low inflation numbers and the availability of liquidity in the system, that we want to lend more. That is the message we want to give to the country,” he said. The upcoming capital infusion is expected to further strengthen lending capacity.
Market Reaction
The remarks boosted confidence in PSU bank stocks, particularly among investors tracking compliance with regulatory requirements. Market analysts suggest that while the fundraising will cause limited dilution, government backing ensures stability and improved prospects for these lenders.
