Government May Seek Extension To Meet Minimum Public Float Norm
The Finance Ministry may approach markets regulator SEBI seeking relaxation on the 25 percent minimum public shareholding norm in some public sector banks.
There are 13 banks including IDBI Bank Ltd and Bank of India Ltd in which the government holds more than 75 percent.
If these banks are unable to meet the norm by August deadline, the Department of Financial Services will have to approach the Securities and Exchange Board of India for exemption, sources said.
Listed public sector undertakings (PSUs), including banks, have already been provided one year extension till August 21 to comply with the norms.
Successive capital infusion in the NPA-ridden banks has taken the government’s holding higher, eating into public float over the last two years.
While the government holding in United Bank of India Ltd is the highest at 93.13 percent, government holding in another Kolkata-based lender, UCO Bank Ltd stands at 90.80 percent.
Many PSBs have lined up plans for raising capital from market which will result in increasing the public shareholding.
Together these banks plan to raise capital over Rs 50,000 crore during the current fiscal.
Leading the pack is the Central Bank of India, which has already got shareholders' nod for raising Rs 8,000 crore equity capital via a follow-on public offer, rights issue or a qualified institutional placement (QIP). Canara Bank also proposes to raise up to Rs 7,000 crore through various modes.
Bank of Baroda aims to mop up Rs 6,000 crore, while Syndicate Bank plans to access the capital market and raise equity capital of up to Rs 5,000 crore in one or more tranches.
Several methods are available to listed companies to comply with the public float requirements.
These include issuance of shares to public; offer for sale; sale of shares held by promoters through secondary market institutional placement programme; rights issue to public shareholders; and bonus shares to public shareholders.
Also, Qualified Institutional Placement (QIP) and sale of shares up to 2 percent held by promoters or promoter groups in the open market through block and bulk deal can be done to achieve the minimum 25 percent public float.