← Policy & Regulation: Financial & market regulation (all topics)
MPS (minimum public shareholding) norms - SEBI 25%
What it is
Rule 19A of the Securities Contracts (Regulation) Rules and SEBI LODR require every listed company to keep at least 25% of shares in public hands. PSU banks were given special forbearance, most recently to 1 Aug 2026
Several state lenders remain far outside it - government holding has stood above 90% at Punjab & Sind Bank, Indian Overseas Bank, UCO Bank and Central Bank of India, against a 75% ceiling
Impact on industries
- Forces a genuine free float, which improves liquidity, index eligibility and institutional participation in stocks that were effectively untradeable at 5-10% public holding
- Signals the banks can raise equity independently after years of recapitalisation, diversifying their resource profile beyond the exchequer
- The overhang is large and known - bringing four banks to 25% requires selling billions of shares into the market, so supply is anticipated and weighs on prices ahead of execution
- Deadlines have slipped repeatedly, from Aug 2024 to Aug 2026, so the market discounts the timeline rather than the requirement