Government Plans to Raise ₹45,000 Crore by PSBs in FY26

The Indian government has laid out a detailed roadmap to mobilise ₹45,000 crore during the financial year 2025–26 by leveraging market-driven mechanisms such as Qualified Institutional Placements (QIPs) and the Offer for Sale (OFS) route. The move is aimed at strengthening the capital base of public sector banks (PSBs), enabling sustained credit growth, and complying with regulatory norms on public shareholding.

SBI to Lead Capital Raising Through QIPs

As per news reports, the largest state-owned lender, State Bank of India (SBI), has received approval from the Ministry of Finance to raise ₹20,000 crore via QIPs. This issue is expected to be launched soon and will anchor the broader capital-raising plan.  The QIPs are designed to fortify Tier 1 capital, which forms the core capital reserve of banks and is essential for long-term operational stability.

Disinvestment Plans Target Five PSBs and LIC

Alongside capital infusion, the Centre is actively pushing ahead with its divestment strategy. 5 PSBs: Bank of Maharashtra, Indian Overseas Bank, UCO Bank, Central Bank of India, and Punjab and Sind Bank have been shortlisted for partial stake sale through the OFS route in the coming months. 

As per news reports, the Inter-Ministerial Group (IMG) met on July 8 to finalise the appointment of legal and transaction advisors, marking a significant step towards the planned stake dilution.

In a notable move, the Department of Financial Services has also approved the sale of a stake in Life Insurance Corporation (LIC) via OFS. This will be the first dilution since LIC’s historic IPO in 2022. In parallel, efforts are underway to align listed PSBs with SEBI’s 25% minimum public shareholding norm. 

While Bank of Maharashtra is likely to meet the compliance requirement this financial year, the deadline for the other four banks may be extended to FY27. The government is also targeting to complete the strategic disinvestment of IDBI Bank by October 2025.

Read More: IDFC FIRST Bank Dividend of ₹0.25 Record Date Tomorrow, July 11, 2025!

Conclusion

The government’s capital mobilisation and disinvestment strategy reflects a broader effort to strengthen the financial health of PSBs and ensure regulatory compliance. With SBI leading the QIP initiative and five banks along with LIC lined up for OFS, FY26 is expected to witness significant market-led developments in the public banking sector.

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