Capital Surge Ahead: PSU Banks Gear Up for Rs 45,000 Crore QIP Drive

Image Source: CNBC TV18

India's public sector banks will raise Rs 45,000 crore of new capital in FY26 using Qualified Institutional Placements (QIPs), a strategic initiative to improve balance sheets and address regulatory requirements. The proposal was cleared by government sources as part of a larger divestment and compliance program.

SBI Leads the Way

State Bank of India got the Finance Ministry's nod to raise Rs 20,000 crore through QIPs

The window of fund-raising would soon open, thus positioning SBI as the anchor of this capital mobilization wave

Disinvestment Strategy in Practice

Government will divest its holding in five PSU banks in Offer for Sale (OFS):
• Bank of Maharashtra
• Indian Overseas Bank
• UCO Bank
• Central Bank of India
• Punjab and Sind Bank

They are designed to satisfy SEBI's minimum public shareholding of 25%.

LIC Stake Sale Also in the Offing

Department of Financial Services has sanctioned a sale of Life Insurance Corporation holding through OFS

Timing will be investor and market sentiment driven

Compliance Deadlines and Extensions

Bank of Maharashtra will be meeting the 25% public shareholding requirement this year

For the remaining four banks, the timeline can be advanced to FY27

This new capital will go towards augmenting provisioning, enabling lending expansion, and bringing financial solidity to the overall public banking system.

Sources: Moneycontrol, Business Standard, Financial Express, MarketScreener, Economic Times