Government will get 6,400 crores by reducing shares in Bank of Maharashtra and Central Bank to 51%
The government holds 95.8% in IOB, 92.5% in BOM, 92.4% in CBI and 89.1% in BOI.
If the government sells its entire stake in Bank of India (BOI) and Indian Overseas Bank (IOB), it will get around Rs 28,600 crore. Rating agency Care Ratings has mentioned this in its analysis.
Finance Minister Nirmala Sitharaman said in the budget 2021-22 that in the new financial year, the government will privatize at least two public sector banks. The government has set a target of raising Rs 1.75 lakh crore through disinvestment in FY 2021-22.
Bank of Maharashtra, Central Bank to get 6,400 crores on bringing shares at 51%
It is not yet known whether the government will sell its entire stake in both BOI and IOB. According to CARE's analysis, if the government reduces its stake in both banks to 51%, then it will bring 12,800 crore rupees to its coffers.
If the government also reduces its stake in Bank of Maharashtra (BOM) and Central Bank of India (CBI) to 51%, then both will get around Rs 6,400 crore. The government holds 95.8% in IOB, 92.5% in BOM, 92.4% in CBI and 89.1% in BOI.
IOB has the highest equity capital, BOI has the highest market price
Madan Sabnavis, chief economist at CARE Ratings, said, "IOB has the highest equity capital while BOI has a higher market value than other public sector banks. If the government keeps the management of both banks in its hands and sells its stake to 51% at current prices, then it will get around Rs 12,800 crore. ' Sabnavis says that if the government sells its entire stake in both banks at current prices, it will get around Rs 28,600 crore.
Government can bring stake up to 51 % before privatizing banks
It is not yet clear which government will reduce its stake in the bank, but according to media reports, IOB, BOM, BOI and CBI may be named in this list. It is believed that the government will bring its stake in public sector banks to 51% before bringing it down from the earlier 50% to make private players part of the privatization plan.
The shares of four banks were hit by an upper circuit on the news of disinvestment
The news of the government reducing its stake in Bank of Maharashtra, Indian Overseas Bank, Central Bank of India, Bank of India came today. On this news, shares of these four banks were hit by an upper circuit today and they closed with a jump of about 20%.
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