Central Bank of India OFS 2026: Govt to sell 8%

What was announced and why it matters

Shares of Central Bank of India fell more than 6% on Friday after the Government of India announced a stake dilution of up to 8% through an offer for sale (OFS). The Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla said the Centre would initially divest 4%, with an additional 4% available under a greenshoe (oversubscription) option depending on demand. The sale is being done through the stock exchange mechanism. The move is part of the government’s broader disinvestment strategy and also links to public shareholding compliance for listed public sector banks.

OFS structure: base offer plus greenshoe

The base offer is for 4% of the bank’s paid-up equity capital. Under this base issue, the government proposed to sell 36,20,56,051 equity shares (about 36.21 crore shares), which was stated as equivalent to 4% of the bank’s total issued and paid-up equity share capital. Alongside this, the government kept an option to sell an equal number of shares under the greenshoe option, taking the potential sale to 8%.

Separately, the transaction size, if the greenshoe is fully exercised, was indicated at around ₹2,455 crore based on the bank’s prior closing price. Another report pegged the proceeds at about ₹2,456 crore at the full 8% divestment level, based on the same reference of the previous close.

Key dates: who can bid and when

The OFS opened for non-retail (institutional) investors on Friday, May 22, 2026. Retail investors and eligible employees can place bids on Monday, May 25, 2026. The sale was described as scheduled over two trading days, beginning Friday.

This sequencing is typical for OFS issues, where institutional demand is assessed first, and retail participation follows on the next trading day. In this case, the greenshoe option explicitly ties the final size of the divestment to investor demand.

Floor price and discount to market close

The floor price for the OFS was fixed at ₹31 per equity share, as per the official notice referenced in the reports. The floor price was described as about 8.6% lower than the Thursday closing price of ₹33.91. The discount is one of the reasons OFS announcements often trigger short-term pressure on the stock price, especially when the size is meaningful relative to daily traded volumes.

Trading action: sharp fall and heavy volumes

Central Bank of India’s stock fell nearly 6% to more than 6% on Friday after the OFS announcement and launch. The counter saw strong trading volumes, with around 15.64 lakh shares changing hands on the exchange by 12 pm. This was sharply higher than the two-week average volume of 4.09 lakh shares.

Higher volumes on OFS days are common because institutional investors position around the floor price and because the market reprices the stock to reflect the sale discount and additional near-term supply.

Government holding and the public shareholding requirement

The government currently holds 89.27% stake in Central Bank of India, as stated in the report citing the disinvestment secretary’s post. The OFS is also framed as part of compliance with minimum public shareholding (MPS) norms for listed banks. One report noted that to comply with MPS norms, the government would need to divest another 14.27% stake in the bank.

That context matters because the OFS is not just a one-off fundraising event. It signals continued steps over time to broaden public ownership and potentially improve free float and liquidity.

Oversubscription response and exercising the option

Reports also stated that the government decided to exercise the oversubscription option in the ongoing OFS amid strong investor interest, increasing the total issue size from 4% to 8% of the bank’s equity capital. The issue was described as subscribed 2.36 times on the first day, receiving bids for 76.86 crore shares at a price of ₹31.22 per share versus the floor price of ₹31.

A filing by the PSU lender to the exchanges said the Department of Financial Services under the Ministry of Finance expressed willingness to sell up to 72.41 crore equity shares, representing 8% of the bank’s total paid-up equity share capital.

Summary table: offer details at a glance

Market impact: what investors are reacting to

The immediate market reaction was visible in the sharp intraday decline and the surge in trading volumes. The floor price at a discount to the previous close can pull the traded price closer to the offer level in the short term. And the possibility of a full 8% sale increases near-term supply, which the market typically prices in quickly.

At the same time, the OFS route improves free float and can support liquidity, which is one of the stated objectives linked to public shareholding compliance. The government’s ability to raise around ₹2,455 crore to ₹2,456 crore at the full 8% sale size also underlines why pricing, subscription levels, and final allocation matter for both the exchequer and market participants.

Why the OFS is closely watched

This OFS matters for two straightforward reasons reflected in the reports: scale and signalling. Scale, because up to 8% is a meaningful chunk for a state-run lender and can affect near-term demand-supply dynamics in the stock. Signalling, because the sale is positioned within the government’s broader disinvestment and MPS compliance strategy for public sector banks and enterprises.

Investors will track the final outcome across the two trading days, especially how the retail and employee portion participates on May 25 and how the final sale size aligns with the oversubscription option that has been kept available and, as reported, exercised.

Conclusion

The Centre’s OFS in Central Bank of India is structured as a 4% base sale with an additional 4% greenshoe option, with non-retail bidding on May 22, 2026 and retail and employee bidding on May 25, 2026. The floor price is set at ₹31 per share, and the full 8% sale has been indicated at roughly ₹2,455 crore to ₹2,456 crore in proceeds based on the prior close. The next key update will be the final subscription and allocation details as the two-day sale process completes.