SEBI MPS Deadline For Government Bank: What Will Happen After Seven Government Banks Printed Rs. 7 Lakh Crore in a Single Year?

SEBI MPS Deadline For Government Bank: 7 government banks have printed a staggering Rs 7 lakh crore in the last year. However, a significant turning point in the share price surge of these PSU banks is about to occur. The deadline that SEBI has set for MPS is August, and that date is drawing near. Tell us what will happen to these banks’ shares going forward in this scenario.

SEBI MPS Deadline For Government Bank
SEBI MPS Deadline For Government Bank

SEBI MPS Deadline For Government Bank

Over the last year, PSU bank shares have shown outstanding performance. Seven government banks have provided returns of more than 100% of these. Seven government banks have printed Rs 7 lakh crore in the past year, according to the statistics. However, the recent surge in the shares of these PSU banks is set to reach a significant turning point.

The government was really informed by SEBI that they would need to lower their holdings in these shares by 75% in accordance with the Minimum Public Share Holding, or MPS, regulations. Let us inform you that SEBI has extended the MPS deadline to August, which is rapidly approaching. It is unclear how a SEBI ruling may affect this rally in such a scenario.

What is the Issue?

All listed businesses will be required to maintain a 25 percent MPS, according to SEBI. State-owned banks, however, had received a special extension from the regulator. They have till August 2024 to fulfill the MPS requirement of 25%.

Which Bank Owns the Largest Portion?

The majority of public sector banks are significantly owned by the government; Indian Overseas Bank (IOB) and Punjab and Sind Bank (PSB) have respective stakes of 96.38% and 98.25%. Low free float is one of the factors contributing to the public sector bank share surge. Punjab National Bank (PNB) satisfies the 25% threshold among the seven PSU banks that have more than quadrupled investors’ value in the previous year, while Union Bank of India just became compliant last month after a Rs 3,000 crore QIP.

All five of the surviving multibaggers—Bank of Maharashtra, Central Bank of India, UCO Bank, Indian Overseas Bank, and Punjab and Sindh Bank (PSB)—will now need the government to reduce its ownership position.

With 98.25% of the government’s equity, the PSB has produced an outstanding 126% return over the last year. Likewise, Indian Overseas Bank, which has a 96.38% government holding, has generated a 160% return. IOB is also the most expensive stock out of the 12 PSU banks.

Now, What Will Happen Next?

Growth prospects and valuations will also have an impact on how public sector bank shares perform in the future. Because of their excellent values, analysts think that public sector bank shares remain a solid investment option even with the recent price increase. A major event for public sector banks’ stock might occur when they meet the deadline to finish the MPS regulations.

Public sector bank shares have performed very well, in part because of their low free float. This may lead to an imbalance between supply and demand in the stock market, which can raise share prices.

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