The government’s offer for sale (OFS) in Central Bank of India was subscribed 2.35 times on the first day, reflecting strong demand from institutional investors. The response prompted the government to exercise the entire green shoe option.
The offer for sale received “enthusiastic response from investors,” Arunish Chawla, secretary in the department of investment and public asset management (Dipam), said on X on Friday. “The government has decided to exercise the entire green shoe option. Retail investors and employees get to bid on Monday 25th May 2026.”
A green shoe option here refers to a provision that allows the seller to issue or sell additional shares if investor demand is higher than expected.
The strong response to the OFS comes at a time when the government has set an ambitious disinvestment and asset monetization target of ₹80,000 crore for FY27, nearly 135% higher than the revised divestment estimate of ₹33,837 crore for FY26, with major transactions including those of and Life Insurance Corp. of India (LIC) expected to support the revenue mobilization.
The government had garnered ₹16,885.56 crore from disinvestment in FY26, compared with ₹10,163.02 crore in the previous fiscal year, Dipam data showed. Besides disinvestment receipts, ₹28,420.49 crore was raised through asset monetization in FY26. There were no such asset monetization receipts before FY26.
Currently, the government holds 89.27% stake in , and following the exercise of the greenshoe option, its stake will come down to 81.27%.
The OFS is part of the government’s broader disinvestment and public shareholding strategy aimed at improving market liquidity and complying with minimum public shareholding norms for public sector banks.
The strong demand from institutional investors signals continued appetite for government-backed banking stocks notwithstanding the volatility in the broader market. Retail investors and eligible employees can place bids on 25 May.
With the , the government diluted part of its stake in Central Bank of India, while retaining majority ownership.
The government currently holds 89.27% stake in Central Bank of India. Following the exercise of the greenshoe option, its stake will fall to 81.27%.
Market participants said the healthy subscription reflects improved investor sentiment towards public sector banks.
As per experts, the strong response to the government’s offer for sale in the Central Bank of India reflects improving investor confidence in public sector banks amid better profitability, lower bad loans and sustained credit growth.
“The 2.35 times subscription on the first day indicates a healthy institutional appetite for PSU banking stocks. Investors are increasingly viewing state-run lenders as stronger balance-sheet stories compared to previous years,” said Dharmveer, assistant professor, department of economics, Delhi School of Economics.
He said the government’s decision to exercise the full green shoe option also suggests its confidence in market demand and could help improve liquidity and free float in the stock.
The government has been gradually reducing its stake in public sector banks as part of its broader disinvestment and capital market reforms strategy. A trigger for its stake dilution has been the Securities and Exchange Board of India’s () minimum public shareholding norms that require all listed companies, including state-run banks, to maintain at least 25% public shareholding. Several public sector banks still remain below this threshold.
Over the last few years, government has diluted stakes in several public sector banks, including State Bank of India, Bank of Baroda, Punjab National Bank, Indian Overseas Bank and Central Bank of India through different market routes.
Shares of Central Bank of India fell 8% to close at ₹31.22 on Friday.