The Indian government is set to reduce its substantial holding in the state-owned Bank of Maharashtra through a strategic divestment plan. An Offer for Sale (OFS) will be launched, allowing the government to offload a portion of its stake, a move that is expected to fetch significant revenue and help the bank comply with regulatory requirements.
OFS Schedule and Stake Dilution Details
According to a post on social media platform X by Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM), the OFS for Bank of Maharashtra will commence on Tuesday, December 2. The sale will initially open for non-retail investors, with retail investors getting their opportunity to bid on Wednesday, December 3.
The government plans to disinvest a 5% equity stake in the bank. Additionally, it has included a green shoe option of 1%, which could take the total stake dilution to 6%. As of the end of the September 2025 quarter, the government held a commanding 79.6% stake in the Pune-based lender.
Financial Implications and Regulatory Compliance
This strategic sale is poised to generate substantial funds for the government. Based on the bank's prevailing market price of ₹57.65 per share, the divestment of up to a 6% stake could help the exchequer garner approximately ₹2,600 crore.
A primary objective behind this stake sale is to enable Bank of Maharashtra to meet the minimum public shareholding (MPS) norm of 25%. Post the OFS, the government's holding is projected to fall below the 75% threshold, aligning the bank with the Securities Contract (Regulation) Rules mandated by the Securities and Exchange Board of India (Sebi).
While Sebi has granted an extension till August 2026 for Central Public Sector Enterprises (CPSEs) and public sector financial institutions to comply, this move by the government is a proactive step. Other public sector banks where the government stake still exceeds the limit include:
- Indian Overseas Bank (94.6%)
- Punjab & Sind Bank (93.9%)
- UCO Bank (91%)
- Central Bank of India (89.3%)
Strong Financial Performance Supports the Move
The stake sale comes at a time when Bank of Maharashtra has demonstrated robust financial health. For the second quarter of the fiscal year 2025-26 (Q2FY26), the bank reported a 23% year-on-year growth in standalone net profit, reaching ₹1,633 crore.
This profit surge was supported by a healthy rise in interest income and an improvement in asset quality. The bank's interest income climbed to ₹7,128 crore from ₹6,017 crore in the same quarter last year. Its total income also saw a significant increase to ₹7,973.61 crore.
On the critical parameter of asset quality, the bank showed marked improvement. Its gross Non-Performing Assets (NPAs) ratio declined to 1.72% of gross loans as of September 2025, down from 1.84% a year earlier. Similarly, the net NPA ratio improved to 0.18% from 0.20%.
The government's decision to dilute its stake in Bank of Maharashtra through this OFS is a significant development in the public sector banking space. It underscores a continued effort to bring state-owned lenders in line with market regulations while capitalizing on their improved financial performance to raise capital.
