IDBI, Central Bank to IOB: PSU Bank shares edge higher after THIS divestment update

Several PSU bank stocks, including IDB Bank, Central Bank of India, Indian Overseas Bank (IOB), UCO Bank and Bank of Maharashtra, traded with decent gains in the morning trade on Tuesday, February 25, amid fresh divestment buzz.

Shares of these PSU banking stocks rose in an otherwise weak market after reports emerged that the Department of Investment and Public Asset Management (DIPAM) on Monday invited bids to assist the government in divesting its stake in public-sector banks.

According to a PTI report, "the Department of Investment and Public Asset Management (DIPAM) invited bids from merchant bankers and legal firms on Monday to assist the government in divesting its stake in public sector banks and listed financial institutions."

"As per the two RFPs (request for proposal) floated by DIPAM, the merchant bankers and legal advisors would be empanelled for a period of three years, which could be extended by one more year. The last day for merchant bankers to bid is March 27," the report added.

Five public sector banks are yet to meet the minimum 25 per cent public shareholding norm mandated by market regulator Sebi.

As the PTI report highlighted, the government currently holds a 98.3 per cent stake in Punjab & Sind Bank, 96.4 per cent in Indian Overseas Bank, 95.4 per cent in UCO Bank, 93.1 per cent in Central Bank of India and 86.5 per cent in Bank of Maharashtra.

The government has set an August 1, 2026, deadline for such entities to reduce government holding and meet public float norms.

Moreover, the government holds an 86.36 per cent stake in IRFC, 85.44 per cent in New India Assurance, and 82.40 per cent in General Insurance Corporation.

A rough phase

Most PSU bank stocks have seen significant losses in the last one year. In fact, almost all components of the Nifty PSU Bank index have been in the red over the last year.

Shares of UCO Bank have lost over 35 per cent, while Punjab and Sind Bank and Indian Overseas Bank shares have fallen more than 30 per cent in the last one year.

Shares of Central Bank, Punjab National Bank, Bank of India, Canara Bank, Bank of Baroda and Union Bank have fallen 20-30 per cent in the same period.

Weak quarterly numbers, stretched valuations, and loss of market share to large private sector peers are some of the key factors keeping PSU banking stocks down in the last year.

(With inputs from PTI)

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