Investors May Not See Gains From State-Run Banks' QIPs

Govt is selling stake in IOB, Bank of Maharashtra, Central Bank of India, PSB, and UCO Bank

- Anshika Kayastha & Gopika Gopakumar

State-owned banks that are raising funds via qualified institutional placements (QIPs) to help the government meet a regulatory deadline are unlikely to score any significant gains for themselves or investors.

The government is looking to sell stakes in Indian Overseas Bank (IOB), Bank of Maharashtra, Central Bank of India, Punjab & Sind Bank (PSB) and UCO Bank to comply with the Securities and Exchange Board of India's (Sebi) rule requiring at least 25% public shareholding for all listed companies.

Qualified institutional placements enable publicly-traded companies to raise funds to finance key projects or meet capital requirements by issuing fresh equity shares, convertible debentures, or other securities to qualified institutional buyers.

But the five public sector unit (PSU) banks have launched QIPs despite being comfortable in terms of mandatory capital requirements.