Finance Minister of India Nirmala Sitharaman on Friday has advanced the public shareholding from 25% to now 35%. The decision is predicted to affect majority companies with public shareholding with less than 25% with state-owned companies hitting the hardest, says experts to The Economic Times.
This decision was made for the Security and Exchange Board of India (SEBI) to take the carry forth the announcement regarding the hike and to reduce the maximum promoter shareholding from the current level of 75% to 65%. The banks are in a state of speed due to the limited time frame of 2 years that has been allotted for them to achieving compliance. There are difficulties that can be seen on banks with stressed finances to raise capital from the market and bring the government holding down to below 75%.
There are many promoters from the listed companies such as TCS, Wipro and many others who hold 65% of the company’s shares. These are the few companies where the founders have the majority shares. There is no further news on how much time these companies will be given to increase the percentage of the public shares. TCS ( Rs 59,600 crore), Wipro ( Rs 15,000 crore) and D-mart ( Rs 14,000 crore. The report also states that maintaining the 25% public shareholder has already been difficult and increasing to 35% will be challenging.
“Government has large holdings in government banks which have further increased in the last 10 years, driven mostly by the need for government participation to drive policy and for social objectives,” former Reserve Bank of India governor Urjit Patel had said last month at an event in Stanford University.a