A reported plan to reduce the government’s stake in Indian Overseas Bank (IOB) to 75% would leave it in control while bringing the bank’s non-government shareholding to the level associated with public-float rules.
The Economic Times reported Friday, Oct. 23, that the government was considering cuts to 75% in IOB, Central Bank of India, UCO Bank and Punjab & Sind Bank. Citing an unnamed official, the newspaper said the government might sell shares through offers for sale, depending on market conditions, or the banks could raise capital themselves. No official announcement has confirmed the four-bank proposal.
IOB’s shareholding data lists the government’s stake at 92.44% on June 30, 2026. A 75% state holding would leave the other quarter outside government ownership, matching the public-shareholding threshold for affected listed public-sector companies. IOB’s 2025 placement document recorded an exemption through Aug. 1, 2026.
The Securities and Exchange Board of India (SEBI) approved a separate compliance route for IOB on Monday, Oct. 19: issuing up to 100 million new shares to eligible employees. The bank disclosed the approval to stock exchanges Tuesday, Oct. 20. SEBI said the approval applied only to IOB and would not set a precedent. The filing gave no date for issuing the shares.
SEBI rules allow companies to meet public-shareholding requirements through several channels, including public offerings, market sales and placements with qualified institutions. A circular issued April 7 paused penal action for listed entities whose compliance due dates fell between April 1 and Sept. 30, 2026. It did not reset the public-shareholding deadline.
Separate privatization discussions would involve a transfer of control. The laws governing nationalized banks require the government to retain at least 51% of paid-up equity capital. A reduction to 75% would therefore remain above that floor. The Economic Times also quoted an official saying privatization would require legislative changes.
The 2021-22 Union Budget included two public-sector banks and one general insurer in a planned privatization program for that fiscal year, in addition to IDBI Bank. Finance Minister Nirmala Sitharaman said legislative amendments would be needed; the speech did not name IOB.
The Economic Times separately reported that NITI Aayog had shortlisted IOB and Central Bank of India for possible privatization. That reported shortlist and a possible privatization round remain unconfirmed.
