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These Banks Could Miss Out on Meeting Public Float Norms Prior To Deadline

As discussions on the merger of some public-sector banks (PSBs) pick up pace, seven PSBs, especially United Bank of India, could miss the August deadline to meet the 25% public float norm. So the finance ministry may request capital markets regulator Securities and Exchange Board of India to extend the deadline for the PSBs.

As of end-March, the government held more than 75% in seven PSBs — United Bank of India, Indian Bank, Bank of Maharashtra, Central Bank of India, Punjab and Sind Bank, Indian Overseas Bank and UCO Bank. If the merger of some of these banks is effected, as is speculated, the government’s shareholdings in the larger entities may change. However, any such merger will take time to be implemented.

According to norms, the government’s stake in public-sector units should not be more than 75% by August 2017.

While discussions are on about the possibilities of merger of some of the PSBs, speculation is rife about United Bank of India and UCO Bank being merged with bigger entities.

In 2014, the government had notified rules for a minimum 25% public shareholding in listed state-run companies. It was aimed at promoting a wider investor base in listed state-run companies and boosting the government’s plan to raise funds from disinvestment. Prior to this move, listed PSUs were mandated to have at least a 10% public holding, whereas listed non-PSUs were asked in June 2010 to have at least a 25% public shareholding within three years.

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