New Delhi: Five public sector lenders, including Bank of Maharashtra, IOB and UCO Bank, are planning to reduce government stake to less than 75 percent to comply with SEBI's minimum public shareholding (MPS) norms, Financial Services Secretary Vivek Joshi has said. Out of the 12 public sector banks (PSBs), four were complying with MPS norms as on March 31, 2023.
"As part of an ongoing effort, three more PSBs have complied with minimum 25 per cent public float during the current financial year. Remaining five PSBs have laid out action plans to meet MPS requirement," he told PTI in an interaction.
Currently, government holding in Delhi-based Punjab & Sind Bank is 98.25 percent. It is followed by Chennai-based Indian Overseas Bank at 96.38 percent, UCO Bank 95.39 percent, Central Bank of India 93.08 percent, Bank of Maharashtra at 86.46 percent. As per the Securities and Exchange Board of India (Sebi), all listed companies must maintain an MPS of 25 percent.
However, the regulator had given special forbearance to state-owned banks. They have time till August 2024 to meet the requirement of 25 percent MPS. Joshi said banks have various options to bring down the stake, including follow on public offering or Qualified Institutional Placement.
Depending on market condition, each of these banks will take a call in the best interest of shareholders, he added. Without giving a timeline, he said, efforts were on to meet the requirement. Joshi said the finance ministry has directed all state-owned banks to review their gold loan portfolio as instances of non-compliance with regulatory norms have been noticed by the government.
The Department of Financial Services (DFS) in a communication addressed to heads of PSBs has asked them to look at their system and processes related to gold loan. A directive in this regard was issued last month advising them to fix anomalies relating to collection of fees and interest and closure of gold loan accounts.
The letter flagged various concerns, including disbursement of gold loans without requisite gold collateral, anomalies regarding collection of fees and repayment in cash.
The DFS urged banks to undertake a thorough review of the last two-year period from January 1, 2022 to January 31, 2024 so as to ensure that all gold loans were disbursed in compliance with regulatory requirements and internal policies of banks.
It is to be noted that the price of the yellow metal has surged to a record level. Price of 10 gm gold in the last one month jumped from Rs 63,365 to Rs 67,605. According to the letter, the department has come across instances of non-compliance regarding the gold loan portfolio and hence issued the advisory.
The country's biggest lender, State Bank of India (SBI) alone has a gold loan portfolio of Rs 30,881 crore as of December 2023. Punjab National Bank's gold loan exposure stood at Rs 5,315 crore while Bank of Baroda was at Rs 3,682 crore at the end of the third quarter.
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