New Delhi: The Central government is preparing to launch an Offer for Sale (OFS) in Indian Overseas Bank (IOB) as part of its strategy to reduce its stake in public sector banks and comply with minimum public shareholding norms, according to official sources.
The proposed stake sale comes after the government’s successful OFS in the bank last year and forms part of a broader disinvestment programme aimed at increasing public shareholding while retaining majority ownership.
Government to pare stake in IOB
The Centre currently holds a 92.44 per cent stake in Indian Overseas Bank, well above the minimum public shareholding requirement for listed companies.
According to official sources, the government is expected to launch the OFS shortly to reduce its holding and improve the public float in the lender.
The move follows a successful stake sale in December 2025, when the government diluted a 2.17 per cent stake in IOB through an OFS that received a strong response from investors.
More PSU banks likely to see stake dilution
Officials indicated that the government intends to continue reducing its holdings in several public sector banks over the coming months.
Among the likely candidates for future stake sales are Punjab & Sind Bank and UCO Bank.
The Centre currently owns 93.85 per cent of Punjab & Sind Bank and 90.95 per cent of UCO Bank, both above the prescribed minimum public shareholding threshold.
The planned stake dilution is expected to help these banks comply with listing regulations while enhancing market liquidity.
Part of wider disinvestment strategy
The proposed OFS is part of the government’s broader disinvestment programme, which seeks to increase public participation in state-owned enterprises without relinquishing majority control.
Officials said the strategy is aimed at improving liquidity in listed public sector companies while mobilising resources for the government.
The Department of Investment and Public Asset Management (DIPAM) has mobilised Rs 20,272 crore through disinvestment during FY27 so far, according to official sources.
Asset monetisation target set at Rs 80,000 crore
Alongside disinvestment, the government has set an asset monetisation target of Rs 80,000 crore for the current financial year.
The Centre plans to raise these resources through strategic stake sales and the monetisation of public assets across sectors.
Officials said the disinvestment and asset monetisation initiatives remain an important component of the government’s fiscal strategy, helping generate revenue while encouraging wider public participation in public sector enterprises.