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Shares of Indian Overseas Bank (IOB) fell 4 per cent to Rs 35.01 on December 17, a day after the government announced plans to sell up to 3 per cent stake in the state-owned lender through an Offer For Sale (OFS) at a floor price of Rs 34 per share. The floor price represents a 7 per cent discount to Tuesday’s close of Rs 36.60.

At the current market price, the government could raise roughly Rs 2,000 crore by offloading up to 3 per cent of the bank’s equity. As of September 30, the government held nearly 95 per cent stake, or more than 18 billion shares, in IOB, according to NSE data.

In a regulatory filing, IOB said the government plans to sell up to 38.51 crore shares (2 per cent of total equity), with an option to additionally sell 19.25 crore shares (1 per cent) as a green shoe. The Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla confirmed that the OFS will open tomorrow for non-retail investors, with retail investors able to bid on Thursday.

The bank also noted that 1,50,000 shares (0.001 per cent of total equity) may be offered to eligible employees, with individual allotments capped at Rs 5 lakh, subject to approval under OFS guidelines.

The OFS is part of the government’s broader plan to meet the minimum public shareholding requirement of 25 per cent for listed companies, in line with SEBI rules. Other PSU banks where the government holds more than the minimum threshold include Punjab & Sind Bank (93.9 per cent), UCO Bank (91 per cent), and Central Bank of India (89.3 per cent). Earlier this month, the government also opened an OFS of up to 6 per cent stake in Bank of Maharashtra.

Shares of IOB have declined 31 per cent so far in 2025, in contrast to a 27 per cent rise in the Nifty PSU Bank index, reflecting investor caution ahead of the stake sale.