UCO Bank, IOB, Central Bank of India shares rally up to 2%, NIACL also rises; here is why select PSUs are rising today

As per the two RFPs (request for proposal) floated by DIPAM, the merchant bankers and legal advisors would be selected for three years, which could be extended by one more year. The last day for putting in bids by merchant bankers is March 27.

Currently, a host of public sector banks and financial institutions are yet to meet the minimum 25% public shareholding norm mandated by market regulator SEBI.

In the early trade, Central Bank of India was trading 1.76% higher on the NSE, while Bank of Maharashtra shares were up nearly 1%. UCO Bank was trading 0.74% higher. Besides, IOB shares were trading 0.45% higher, and Punjab & Sind Bank was up 0.33%.

Additionally, state-run insurer The New India Assurance was also trading 1% higher at ₹158.07 on the NSE.

IRFC shares were also trading over 1% higher at ₹124.90 apiece on the NSE.

As per the RFP, the merchant bankers-cum-selling brokers would advise the government on the timing and the modalities of the transaction for dilution of equity in select PSU banks/select listed public financial institutions.

DIPAM, which is under the Finance Ministry, manages government shareholding in public sector entities.

The government has set an August 1, 2026, deadline for such non-compliant entities to reduce government holding and meet public float norms.

Meanwhile, Finance Minister Nirmala Sitharaman, in her 2021-22 Budget speech, announced the government's intention to take up privatisation of two public sector banks, besides IDBI Bank.

The privatisation of IDBI Bank is currently in process.

Disinvestment objectives

The New Public Sector Enterprise (PSE) Policy for Atma Nirbhar Bharat, which also provides overall guidance on strategic disinvestment, was notified on February 4, 2021, with the approval of the Cabinet.

The policy intends to minimise the presence of the government in the PSEs across all sectors of the economy.

The main objectives of disinvestment by the government are to reduce the financial burden on the government and/or raise wealth to meet particular needs. Besides, it also intends for the long-term growth and development of a country.

The second reason for disinvestment is that it will improve the efficiency of the enterprise. If the extent of disinvestment is such that a wider share of ownership is encouraged, it will introduce competition and market discipline.

NIFTY PSU BANK 1-year performance

Data with Trendlyne show that the NIFTY PSU Bank index has fallen 18% in the past one year (as of Feb 24, 2025 close.)