Central Bank of India: Government to Offload Upto 8% Equity via OFS, Floor Price Set at ₹31
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The Indian government is offloading up to 8% equity in Central Bank of India through an Offer for Sale (OFS), with the floor price set at ₹31 per share. This strategic move aims to comply with SEBI's minimum public shareholding norms and is expected to raise over ₹2,200 crore for the exchequer.
Government to Offload Up to 8% Equity in Central Bank of India
In a significant development for India's banking sector, the Government of India has initiated an Offer for Sale (OFS) to divest a portion of its equity in the Central Bank of India. This move, which includes a base offer of 4% equity and a greenshoe option for an additional 4%, signals the government's ongoing commitment to disinvestment and adherence to regulatory requirements. The OFS has set a floor price of ₹31 per share.
The sale is structured to occur over two trading days. Non-retail investors were able to place their bids on Friday, May 22, 2026, while retail investors and eligible employees will have their opportunity to bid on Monday, May 25, 2026. The bidding window on both days is from 9:15 a.m. to 3:30 p.m. Indian Standard Time.
Key Details of the OFS
Floor Price and Discount
The government has fixed the floor price for the OFS at ₹31 per equity share. This price represents a discount of approximately 8.5% to 9.4% compared to the bank's closing price on Thursday, May 21, 2026, which was around ₹33.9 to ₹33.94. This discount is a common practice in OFS to attract investor interest.
Offer Size and Potential Proceeds
The base offer comprises 36.21 crore shares, equivalent to a 4% equity sale. The greenshoe option allows for the sale of an additional 36.21 crore shares, bringing the total potential divestment to 8% of the bank's equity. If the greenshoe option is fully exercised, the government could raise an estimated ₹2,244.8 crore to ₹2,456 crore from this stake sale. Goldman Sachs (India) Securities Private Limited has been appointed as the Seller's Broker for this transaction.
Investor Categories and Reservations
Specific allocations have been made for different investor categories:
- Retail Investors: At least 10% of the offer shares are reserved for retail investors, defined as those bidding for shares worth up to ₹2 lakh. Retail investors are also eligible for a 5% discount on the final allotment price and can bid at the cut-off price.
- Eligible Employees: A separate pool of 75 lakh equity shares has been earmarked for eligible employees of the bank. These employees can apply for shares worth up to ₹5 lakh and are also permitted to bid in the retail category within applicable limits.
- Institutional Investors: Non-retail investors, including mutual funds and insurance companies, have a minimum 25% reservation of the OFS shares. Non-retail investors who did not receive full allotments on May 22 also have the option to carry forward their unallotted bids to May 25. The institutional portion of the OFS saw bids worth over ₹2,380 crore, leading to an oversubscription of more than two times on May 22, 2026.
Rationale: Meeting MPS Norms
The primary driver behind this OFS is the government's obligation to comply with the Securities and Exchange Board of India's (SEBI) minimum public shareholding (MPS) norms. SEBI mandates that all listed companies must maintain a public shareholding of at least 25%. Prior to this OFS, the Government of India held a substantial 89.27% stake in Central Bank of India.
Should the full 8% equity be divested, the government's holding in the public sector bank would reduce to 81.27%. While this move significantly reduces the government's stake, further divestment will be necessary in the future to completely meet the 25% public shareholding requirement. This ongoing process aligns with broader government efforts to streamline public sector entities and enhance market liquidity.
Market Reaction and Recent Financials
The announcement and opening of the OFS led to a noticeable reaction in Central Bank of India's stock. Shares of the bank declined by approximately 6% to 7% on Friday, May 22, 2026, trading near their 52-week low. This immediate drop can be attributed to the discount offered in the OFS and the increased supply of shares in the market. The bank's market capitalization also saw a reduction.
In its recent financial performance, Central Bank of India reported a 30% decline in its fourth-quarter net profit, which stood at ₹724.4 crore. However, the bank did see a positive trend in its net interest income (NII), which rose by 17.8% year-on-year to ₹4,002 crore.
Broader Implications for the Indian Financial Landscape
The Central Bank of India's OFS is part of a larger strategy by the government to manage its holdings in public sector undertakings. In the fiscal year 2025-26, the government successfully raised ₹2,624 crore through an OFS in Bank of Maharashtra and ₹1,419 crore from Indian Overseas Bank. The current fiscal year's target for disinvestment and asset monetisation is an ambitious ₹80,000 crore. These measures contribute to government revenue and potentially improve the financial health and operational efficiency of the banks.
The ongoing efforts by the government to manage its finances and promote economic growth are multifaceted. For instance, discussions around government payouts and welfare schemes, like the PM Kisan 23rd Installment: July-August 2026 Payout Expected Soon, highlight the continuous circulation of funds within the economy. Furthermore, the banking sector itself is undergoing significant transformation, as seen with innovations like India's Digital Leap: E-Rupee Pilots Revolutionize Welfare and Subsidized Food Distribution, indicating a dynamic financial ecosystem. These broader initiatives, alongside disinvestment, shape the economic trajectory of the nation.
As the OFS concludes and the market absorbs the new shares, investors will be closely watching the long-term impact on Central Bank of India's stock performance and the government's continued strategy for its public sector holdings.