Key Points
- Bank of Maharashtra OFS comprises 5% base offer (38.45 crore shares) plus 1% green-shoe option (7.69 crore shares) totalling 46.14 crore shares
- Floor price set at ₹54 per share, representing 6.34% discount to Monday’s BSE closing of ₹57.66
- Non-retail bidding opened December 2, 2025, with retail investors bidding from December 3
- Government’s current stake at 79.60% will reduce below 75% post-divestment, meeting SEBI compliance requirements
- SEBI has granted CPSEs forbearance until August 2026 to meet 25% minimum public shareholding norm
- Bank of Maharashtra stock is up 10.5% year-to-date despite recent volatility, reflecting investor confidence
- Bank reported 23% growth in standalone net profit to ₹1,633 crore in Q2 FY26, demonstrating strong operational performance
The Department of Investment and Public Asset Management (DIPAM) launched the Bank of Maharashtra stake sale as a structured Offer for Sale, comprising two tranches designed to maximise capital raise while maintaining price discipline. The base offer accounts for 5% of the bank’s paid-up share capital (38,45,77,748 shares), while the green-shoe option provides flexibility to sell an additional 1% (7,69,15,549 shares) if demand exceeds expectations. The floor price of ₹54 per share represents a strategic 6.34% discount to the previous day’s closing price of ₹57.66, balancing investor affordability with revenue maximisation objectives.
Why This Divestment Is Critical For Bank Compliance
Currently, the government holds 79.60% stake in the Pune-based Bank of Maharashtra, well above the 75% threshold that triggers mandatory minimum public shareholding requirements. Under SEBI’s Securities Contract (Regulation) Rules, all listed companies, including public sector enterprises, must maintain a minimum public shareholding of 25%. By reducing government ownership below 75% through this OFS, Bank of Maharashtra will automatically satisfy the 25% minimum public shareholding norm, bringing it into regulatory compliance. SEBI has granted a grace period until August 2026 for Central Public Sector Enterprises and public sector financial institutions to achieve this requirement, making Bank of Maharashtra’s proactive move ahead of schedule.
Revenue Target And Market Impact Analysis
| OFS Component | Shares Offered | Ownership % | Estimated Funds (At ₹54/share) |
|---|---|---|---|
| Base Offer | 38,45,77,748 | 5% | ₹2,076 crore |
| Green-Shoe Option | 7,69,15,549 | 1% | ₹416 crore |
| Total OFS | 46,14,93,297 | 6% | ₹2,492-2,600 crore |
The total OFS aims to raise approximately ₹2,492 to ₹2,600 crore, depending on whether the green-shoe option is fully exercised. At current market prices, even the 5% base offer alone would fetch the government around ₹1,800 crore. The capital raised will strengthen the government’s fiscal position while reducing its exposure to a single PSU bank, allowing for portfolio diversification.
Bidding Timeline And Investor Categories
The OFS follows a sequential bidding process designed to ensure broad participation across institutional and retail segments. Non-retail investors, including domestic and foreign institutional investors, pension funds, and high-net-worth individuals, had the first opportunity to bid on December 2, 2025. Retail investors, including Indian citizens with individual holdings, can place their bids starting December 3, 2025, ensuring equitable access to shares. This two-tier structure mirrors global best practices in primary market offerings, providing institutional investors with priority access while ensuring retail participation.
Bank of Maharashtra’s Strong Financial Performance
Bank of Maharashtra has demonstrated robust financial momentum, with standalone net profit surging 23% to ₹1,633 crore in the second quarter of FY26. This strong profitability underscores the bank’s operational efficiency and asset quality improvements, making the OFS share price attractive to investors. The bank’s capital-to-risk weighted assets ratio has also improved significantly following the ₹3,500 crore qualified institutional placement in October 2024, providing a strong capital cushion for future growth. These fundamentals suggest the bank is well-positioned for sustained performance, enhancing investor confidence in the OFS.
Historical Context, From QIP To OFS
Bank of Maharashtra’s journey toward regulatory compliance began in October 2024 with a landmark ₹3,500 crore qualified institutional placement (QIP), during which the bank issued 61.01 crore equity shares at ₹57.36 per share, discounted 4.99% from the floor price. Major institutional investors including Life Insurance Corporation (LIC), ICICI Prudential Life Insurance Company, and Aditya Birla Sun Life Insurance Company participated in that capital raise. The current OFS builds on that successful capital raise, utilizing market-tested pricing and institutional interest to drive successful divestment. Together, the QIP and OFS represent a coordinated strategy to optimize the bank’s capital structure while meeting regulatory mandates.
Other PSU Banks Facing Similar Compliance Pressure
Bank of Maharashtra is not alone in requiring urgent government stake dilution, as four other state-owned lenders remain significantly above the 75% threshold and face similar compliance deadlines. These institutions include:
- Indian Overseas Bank, with government holding 94.6%
- Punjab & Sind Bank, with government stake at 93.9%
- UCO Bank, with government ownership at 91%
- Central Bank of India, with government control at 89.3%
All five banks must reduce government shareholding below 75% by August 2026 to comply with SEBI mandates. Bank of Maharashtra’s proactive OFS sets a template for how other PSU banks might execute similar divestments efficiently.
Market Sentiment And Stock Performance
Despite recent market volatility, Bank of Maharashtra shares have demonstrated resilience, appreciating 10.5% year-to-date through early December 2025. The stock closed at ₹57.66 on Monday, December 1, down just 1.54% despite broader market pressures. During the OFS announcement, the stock traded at ₹57.15 in early sessions, reflecting modest sell-off pressure typically seen during government stake sales. However, the floor price of ₹54 provides a margin of safety for retail investors entering the OFS, potentially attracting increased participation.
Regulatory And Strategic Implications
This OFS represents a significant milestone in India’s bank privatization and recapitalization strategy, demonstrating the government’s commitment to professionalizing PSU bank governance while retaining strategic control. By bringing government shareholding below 75%, the bank gains greater autonomy in capital allocation decisions and board composition, potentially accelerating digital transformation and risk management improvements. The divestment also aligns with the government’s broader fiscal consolidation objectives, channeling revenue from non-core PSU holdings toward critical infrastructure and social spending.
Investment Considerations For Retail Participants
Retail investors bidding in the Bank of Maharashtra OFS on December 3 should note the following factors:
- The ₹54 floor price represents genuine value, offering a 6.34% discount to market rates
- Strong Q2 FY26 profitability (23% net profit growth) demonstrates underlying bank strength
- Regulatory compliance motivation ensures successful execution of the OFS
- Capital gains tax implications differ based on holding period (consult tax advisor)
- Liquidity is assured via BSE/NSE trading post-OFS allotment
The Bank of Maharashtra OFS marks a watershed moment in PSU bank recapitalization, combining capital raise objectives with regulatory compliance mandates. The ₹2,600 crore fundraise and government stake reduction below 75% position the bank for enhanced governance and operational autonomy. With strong Q2 FY26 financial performance and a strategically priced floor of ₹54 per share, the OFS offers both the government and investors meaningful value creation opportunities. Success of this offering will likely influence how other four PSU banks execute similar compliance-driven divestments by August 2026.
