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Wednesday, Oct 8, 2025 | India

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Govt Plans PSB Stake Cut; Employees Fear Privatisation Push

The government is preparing to reduce its stake in several public sector banks to meet SEBI’s 25% public shareholding norm, but employees and unions warn of risks to jobs, welfare banking, and the banks’ public character.

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Author: Kanal English Desk

Published: 2 hours ago

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Alongside IDBI Bank, the government is also preparing to reduce its stake in other public sector banks through Offer for Sale (OFS) issues. The plan is to offload up to 20 per cent stake in four state-owned lenders, which include Bank of Maharashtra, Indian Overseas Bank, UCO Bank, Central Bank of India, and Punjab & Sind Bank. Department of Financial Services Secretary M Nagaraju said on Tuesday.

This move is aimed at meeting the Securities and Exchange Board of India’s (SEBI) rule that requires listed companies to have at least 25 per cent public shareholding. At present, the government owns more than 75 per cent in many of these banks, and bringing this down will help them comply with the regulation.

Private Banks Keen on Acquisition Financing
At the Global Fintech Festival (GFF) on Tuesday, Amitabh Chaudhry, Managing Director and Chief Executive Officer of Axis Bank, said that his bank is keen to lend to businesses looking for acquisition finance. He noted that foreign banks currently dominate this market in India, but domestic banks are now preparing to enter the space after the Reserve Bank of India (RBI) allowed them to provide such financing last week.

Chaudhry added that private credit is still a relatively new area for Indian lenders. He explained that Axis Bank already has a presence in the bond and loan syndication market and is now looking to expand into acquisition financing as opportunities grow.

On the RBI’s proposed framework on “forms of business”, Chaudhry said Axis Bank will study the final guidelines before making any decisions.

Bank unions fear that cutting the state’s stake is the first step towards privatisation, which could weaken the banks’ social role of supporting rural borrowers, small enterprises, and government welfare schemes. They argue that greater private ownership might shift focus from nation-building to profit, raising concerns about job security, work conditions, and service to common people.

Unions like AIBEA and AIBOC have already opposed similar moves in the past, warning of protests or strikes if employees’ interests are ignored. Many staff also feel their identity as part of a “public institution” could be diluted.

Read more On Bankers’ Concerns on Privatisation

Overall, while the government sees stake dilution as a regulatory necessity under SEBI norms, employees are anxious about its long-term impact on jobs, bank culture, and public service.

Tags:PrivatisationPSBsEmployee ConcernsGovernmentBank of MaharashtraIndian Overseas BankUCO bankCentral Bank of IndiaPunjab and Sind Bank

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