Informist, Wednesday, Jul. 9, 2025

By Priyasmita Dutta

NEW DELHI – State-owned Bank of Maharashtra has sought approval from the Reserve Bank of India to raise up to INR 50.00 billion through a qualified institutional placement in the financial year 2025-26 (Apr-Mar), a senior finance ministry official said. The bank plans to raise capital to bring the government's shareholding significantly below 75%, the official told Informist.

The finance ministry has asked five public-sector banks, in which the public shareholding is below 25%, to increase the public shareholding to 25% by Aug. 1, 2026. This is in line with the Securities Contract (Regulation) Rules issued by the Securities and Exchange Board of India, which mandate that all listed companies, including those in the public sector, must have a minimum public shareholding of 25%. SEBI's minimum public shareholding norm has been in place since 1993, but its provisions are modified from time to time.

Currently, the government holds 79.6% stake in the Pune-headquartered bank. According to its current market capitalisation, if the bank raises around INR 20.00 billion, the government's holding will fall below the 75% mark. The official, however, said the bank wants to raise INR 50.00 billion to be on the safer side.

In October, Bank of Maharashtra had raised INR 35.00 billion through a QIP, which resulted in the public shareholding in the bank rising to 20.4% from 13.5% at the end of September. In case the bank chooses to raise the entire INR 50.00 billion, the public shareholding is likely to increase by 11.5% to 31.9%. This means the government's shareholding will fall to almost 68%.

However, even if the central bank approves the proposal, the bank may not raise the entire amount. According to the finance ministry official, the bank is well capitalised and therefore the only reason for the fund-raising is to lower the government's stake. "The department (Department of Financial Services) may also choose to not give approval for that much," the official said, adding that once the RBI gives its feedback, the finance ministry will give its view on the proposal.

The ministry, along with the banking regulator, assesses the need for capital infusion based on factors such as loan growth, capital adequacy, and current government stake. At the end of March, Bank of Maharashtra's capital adequacy ratio was 20.53%, up from 18.71% at the end of December and 17.38% at the end of March 2024.

Bank of Maharashtra is comparatively well positioned among the five public-sector banks in which the government has to lower its stake. The government holds 94.6% stake in Indian Overseas bank, 93.9% in Punjab & Sind bank, 91% in UCO Bank, and 89.3% stake in Central Bank of India.

In FY25, Bank of Maharashtra had posted a net profit of INR 55.20 billion, up 36% on year. At 1510 IST, shares of the bank were at INR 57.10 on the National Stock Exchange, up 0.5% from Tuesday's close. End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Rajeev Pai

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