According to official sources who spoke to NDTV Profit, the Center intends to implement an Offer for Sale (OFS) in Indian Overseas Bank (IOB) as part of its strategy to decrease its stake in public sector banks and adhere to minimum public shareholding requirements. The OFS is anticipated to be launched shortly in order to reduce the government's 92.44% ownership of Indian Overseas Bank.
This comes after the government successfully sold a 2.17% share in IOB through an OFS in December 2025, which was well appreciated by investors.
In order to satisfy public float requirements, the government is anticipated to continue selling stakes in public sector banks in the upcoming months, according to official sources.
The next banks to be considered for stake dilution are probably Punjab & Sind Bank and UCO Bank.
Currently, the government controls 90.95% of UCO Bank and 93.85% of Punjab & Sind Bank, both of which are substantially more than the minimum public shareholding requirement for listed businesses.
The Center's larger disinvestment policy, which aims to increase market liquidity in state-owned businesses while retaining majority control, includes the proposed stake sales.
The Department of Investment and Public Asset Management (DIPAM) has so far raised Rs 20,272 crore through disinvestment in FY27, according to official sources.
Separately, in an effort to raise funds through strategic share sales and the monetization of public assets, the government has set an asset monetization target of Rs 80,000 crore for the current fiscal year.
During the current fiscal year 2026–2027, the Central Government expanded its disinvestment activities by lowering its ownership of six Central Public Sector Enterprises (CPSEs). In addition to banks, the government is reducing its ownership of other public sector businesses. Through disinvestment, the government has so far raised almost ₹20,000 crore. This now exceeds the ₹16,885 crore that was collected during the course of the previous fiscal year.
The Central Government has raised a total of ₹18,561 crore by selling shares in the Central Bank of India, Coal India, NHPC, NLC India, General Insurance Corporation (GIC), and Indian Railway Finance Corporation (IRFC). The government raised the following approximate sum from the sale of PSU stakes:
Company / Organisation
Amount Raised Through OFS
Central Bank of India
Over ₹2,200 crore
Coal India
Over ₹5,500 crore
NHPC
Over ₹4,300 crore
NLC
Over ₹1,200 crore
GIC
Over ₹3,000 crore
IRFC
Over ₹2,000 crore
Cochin Shipyard
Over ₹1,700 crore
This amount is just in 3 months of the financial year. This amount is higher than the total amount raised by the Government in the last few years. It seems the Government has increased the speed of disinvestment. The government raised ₹16,885 crore in FY 2025-26 and ₹10,163 crore in FY 2024-25. The government had collected ₹16,507 crore in FY 2023-24, ₹35,293 crore in FY 2022-23, ₹13,534 crore in FY 2021-22 and ₹32,886 crore in FY 2020-21.
It seems the NDA-led government has put disinvestment on top of its agenda. Almost all PSU stake sales during the current financial year have been carried out through the Offer for Sale route.
The government is also planning to strategically disinvest in a number of other Central Public Sector Enterprises. Among them are Air India Engineering Services Ltd. (AIESL), Rashtriya Ispat Nigam Ltd. (RINL), and Container Corporation of India (CONCOR).
On stock exchanges, 68 CPSEs are listed. The government owns shares in these businesses worth more than ₹22.80 lakh crore. In addition, 16 public financial institutions, including banks and insurance firms, are listed; the government owns shares in these organizations worth around ₹19 lakh crore. As a result, the government can readily sell a portion of these businesses.
The government’s strategic disinvestment programme is also continuing, although the process has been slow. The Expression of Interest process has been completed for the strategic sale of six CPSEs. These include IDBI Bank, NMDC Steel, HLL Lifecare, Projects & Development India Ltd (PDIL), BEML and Shipping Corporation of India (SCI).
According to Finance Ministry officials, the strategic sale of IDBI Bank is likely to be revived soon. The process had earlier been put on hold because of valuation concerns and limited interest from investors. The government is now expected to move ahead with the stake sale process again.
According to a report, the government is planning to accelerate the process of selling its ownership in public sector banks (PSBs) as part of a significant push towards disinvestment and reforms in the banking industry.
Additionally, it insisted that the hiring of merchant bankers to supervise the transactions is nearing completion, suggesting that the process is accelerating.
The sources that for the next six months, the government intends to sell up to 20% of its shares in five public sector banks (PSBs): Indian Overseas Bank (IOB), Punjab & Sind Bank, Central Bank of India, Bank of Maharashtra, and UCO Bank. The Offer for Sale and Qualified Institutional Placement (QIP) routes will be used to carry out the share sales.
In the case of UCO Bank, for example, the Center hopes to raise Rs 2,500 crore by selling up to 10% of the company. To meet the capital and operating needs of the individual banks, the money earned from the sale of PSB stakes will be utilized.
This action is a component of the government's plan to decrease direct ownership in state-owned banks while simultaneously strengthening their balance sheets. In her 2021–22 Budget speech, Finance Minister Nirmala Sitharaman had previously declared that the government would pursue the privatization of two PSBs in addition to IDBI Bank.
According to information on the BSE website, as of the end of September, the Indian government owned over 93% of Central Bank of India, 96.4% of Indian Overseas Bank, 95.4% of UCO Bank, and 98.3% of Punjab and Sind Bank. Listed corporations must maintain a 25 percent public shareholding, according to the Securities and Exchange Board of India (SEBI); however, government-owned businesses are exempt from these requirements until August 2026.
