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Govt may seek extension of Sebi’s Aug deadline for paring stakes in PSBs

The Finance Ministry may request the Securities and Exchange Board of India (Sebi) to extend the August deadline for public sector banks (PSBs) to meet 25 per cent public float norm as it mulls various options to pare government stake in state-run banks.

There are seven PSBs, including United Bank of India, Indian Bank, Bank of Maharashtra and Central Bank of India, where the government holding is above 75 per cent.

Post the second round of capital infusion in March, the government stake in some more banks could go beyond 75 per cent.

According to Sebi guidelines, government stake in public sector units should be 75 per cent or less by August 2017.

“Effort is there to meet the Sebi’s public float guidelines but in case some banks are unable due to market condition, then we will approach the regulator seeking exemption from minimum public shareholding (MPS) requirement of 25 per cent in those cases,” a finance ministry official said.

There are still five months to go and various options are on the table, like public offer and selling stake to LIC, the official added.

There are four PSU banks where government holding is more than 80 per cent, while it is between 75-80 per cent in three lenders as of December 2016.

Government holding in United Bank of India is at 88.72 per cent, followed by Indian Bank (82.10 per cent), Bank of Maharashtra (81.61 per cent), Central Bank of India (81.28 per cent), Punjab and Sind Bank (79.62 per cent), Indian Overseas Bank (79.56 per cent) and Uco Bank (76.67 per cent).

There is also the option of creating a structure like the Special National Investment Fund (SNIF), another official said, adding that this is not under consideration at present but if need be, it could be looked at to meet the MPS norm.

The government has approved setting up of SNIF to help sick PSUs. The fund is maintained outside the Consolidated Fund of India.

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