The government may look at reducing its stake in the Bank of Maharashtra (BoM) in FY25 to comply with Minimum Public Shareholding (MPS) regulations, while the remaining four public sector banks will not be able to meet the norm in current fiscal, Department of Financial Services (DFS) Secretary Vivek Joshi said.

The government holds 86.46 percent stake in Bank of Maharashtra.

Apart from Bank of Maharasthra, the government's stake in Punjab & Sind Bank stands at 98.25 percent, followed by Indian Overseas Bank (IOB) with 96.38 percent, UCO Bank at 95.39 percent and Central Bank of India with 93.08 percent.

“BoM can work towards meeting MPS, and we can aim to reduce the gap in other banks as well. However, it is unlikely that all banks will meet the MPS requirements in the current year as the gap in MPS among public sector banks (PSBs) is substantial, with figures as high as 97-98 percent for some,” Joshi told Moneycontrol in an interview.

The exemption to meet the minimum public shareholding for public sector undertakings, including public lenders, ends in August.

“We have requested the Department of Economic Affairs (DEA) for a two-year extension to allow more time for compliance. Last year we achieved MPS in three banks, which is a significant accomplishment. Now, five banks remain to meet the targets,” the DFS Secretary noted.

The government’s disinvestment plan hinges on having sufficient investor appetite to absorb the funds in the market.

This potential move is part of a broader strategy to meet MPS requirements. SEBI mandates that the minimum public shareholding must be at least 25  percent for listed companies. This percentage ensures that a sufficient number of shares are available for trading on the stock exchanges, promoting liquidity and preventing excessive concentration of ownership.