Government Divests 6% Stake in Bank of Maharashtra Through Green Shoe Option Amid Strong Investor Demand

The government has decided to utilise the green shoe option to divest a 6 per cent stake in Bank of Maharashtra (BoM) through an offer-for-sale (OFS). This decision follows a strong response from investors on the first day of subscription. The OFS opened for non-retail investors at a floor price of Rs 54 per share, and the issue was subscribed over 400 per cent of its base size.

The initial offer consisted of 38.46 crore shares, representing 5 per cent of BoM's paid-up equity. An additional 1 per cent stake, or 7.69 crore shares, was available through the green shoe option. This brings the total divestment to over 46.14 crore shares, equating to a 6 per cent stake in the bank. The government currently holds a 79.60 per cent stake in BoM.

Strong Investor Confidence in Public Sector Banks

On the first day, the issue was subscribed 4.07 times the base size, indicating robust market confidence. "Offer for sale in Bank of Maharashtra received overwhelming response in the markets today," stated Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM), on X. Retail investors will have their chance to bid on 3rd December 2025.

The floor price for BoM's OFS is set at Rs 54 per share, which is a 6.34 per cent discount from its previous closing price on BSE. At this price, the government expects to raise approximately Rs 2,492 crore by divesting its stake in the state-owned bank. Financial Services Secretary M Nagaraju noted that the impressive subscription rate reflects strong investor confidence in public sector banks and the Indian banking sector's robustness.

Meeting Minimum Public Shareholding Norms

The divestment will help BoM meet the Minimum Public Shareholding (MPS) norms set by the Securities and Exchange Board of India (SEBI). These rules require all listed companies, including public sector entities, to maintain at least a 25 per cent public shareholding. With this stake dilution, BoM will align with these regulations as the government's holding will fall below 75 per cent.

SEBI has granted forbearance to Central Public Sector Enterprises (CPSEs) and public sector financial institutions until August 2026 to comply with these norms. Other banks where government stakes exceed this threshold include Indian Overseas Bank at 94.6 per cent, Punjab & Sind Bank at 93.9 per cent, UCO Bank at 91 per cent, and Central Bank of India at 89.3 per cent.

The government encourages eligible investors to participate in this offer and contribute to value creation in public assets. "Congratulations to the staff and leadership at the Bank of Maharashtra for outstanding financial performance over the last few years," Chawla added.

With inputs from PTI