Indian Overseas Bank Share Price in Focus as Government Plans to Sell Up To 3% Stake

As per news reports, Centre plans to reduce its equity holding in Indian Overseas Bank (IOB) by offering up to 3% of the bank’s shares for sale through an Offer for Sale (OFS). 

This move forms part of broader efforts to improve market participation in the public sector lender and boost capital receipts without increasing debt.  

Details of the Offer 

The OFS process is set to begin with non-retail investors, followed by a window for retail participation. The base offer size will consist of approximately 2% of IOB’s equity, with an option to sell an additional 1% under a green shoe provision.  

At the floor price of ₹34 per share, the government expects to generate about ₹2,000 crore from the stake sale.  

“Offer for Sale in Indian Overseas Bank (IOB) opens tomorrow for Non-Retail investors. Retail investors can bid on Thursday. Government offers to disinvest 2% equity in the bank with an additional 1% as a green shoe option,” Department of Investment and Public Asset Management (DIPAM) said in a post on X.  

Current Shareholding and Market Context 

Prior to the sale, the government held around 94.61% of IOB’s shares, significantly above the minimum public shareholding requirement specified by market regulators. The OFS is expected to help increase the bank’s public float and improve equity market liquidity for IOB’s stock.  

Eligible employees of the bank may also be offered a small allocation of shares under specified terms, subject to regulatory approval. The sale is aligned with Securities and Exchange Board of India rules that mandate listed companies maintain at least 25% public shareholding, with transitional relief provided for public sector entities.  

Read More: RBI Advises Banks to Link MSME Loans to External Benchmark! 

IOB Share Price Performance  

As of December 17, 2025, at 9:27 AM, IOB share price is trading at ₹35.57 per share, reflecting a decline of 2.73% from the previous closing price.  

Conclusion 

The up to 3% stake sale in Indian Overseas Bank represents a step towards market-driven ownership, boosting public participation while helping the government meet regulatory norms and raise non-debt capital. Investor response during the OFS windows will provide early signals on market appetite for PSU bank equity. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.  

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