The government’s offer for sale (OFS) for the Central Bank of India experienced a robust subscription rate of 2.35 times on its opening day, indicating strong interest from institutional investors. This high demand led the government to fully exercise its green shoe option.
Arunish Chawla, secretary in the Department of Investment and Public Asset Management (DIPAM), noted the enthusiastic response from investors on social media. Retail investors and employees will have the opportunity to place bids on May 25, 2026.
A green shoe option allows the seller to issue additional shares if demand exceeds expectations, enhancing the offer's appeal.
This positive reception aligns with the government's ambitious disinvestment and asset monetization goal of ₹80,000 crore for FY27, significantly higher than the revised estimate of ₹33,837 crore for FY26. Major transactions, including those involving IDBI Bank and LIC, are anticipated to bolster revenue.
In FY26, the government raised ₹16,885.56 crore from disinvestment, a rise from ₹10,163.02 crore in the previous fiscal year. Additionally, ₹28,420.49 crore was generated through asset monetization, marking a significant shift as there were no such receipts prior to FY26.
After the OFS, the government’s stake in the Central Bank of India will decrease from 89.27% to 81.27%, while still maintaining majority ownership. This move is part of a broader strategy to enhance market liquidity and meet minimum public shareholding norms for public sector banks.
The strong institutional demand reflects a growing confidence in government-backed banking stocks, despite market volatility. Experts suggest that this trend indicates improved investor sentiment towards public sector banks, driven by better profitability and reduced non-performing assets.
Dharmveer, an assistant professor at the Delhi School of Economics, remarked that the oversubscription signals a healthy appetite for public sector banking stocks, suggesting that investors view these institutions as having stronger balance sheets than in previous years.
The government's ongoing stake reduction in public sector banks is also influenced by the Securities and Exchange Board of India’s (SEBI) regulations, which require listed companies to maintain at least 25% public shareholding. Several public sector banks still fall short of this threshold.
In recent years, the government has reduced its stakes in various public sector banks, including State Bank of India and Punjab National Bank, through various market strategies.
However, shares of the Central Bank of India fell by 8% to close at ₹31.22 on Friday.
