Central Bank's OFS Subscribes 2.35 Times on Day One, Green Shoe Option Exercised

Government Exercises Green Shoe Option in Central Bank of India Sale

The government's offer for sale (OFS) in Central Bank of India has seen a strong demand from institutional investors, prompting the government to exercise the entire green shoe option. The OFS was subscribed 2.35 times on the first day, reflecting the enthusiasm from investors.

According to the department of investment and public asset management (Dipam), the response to the OFS has been encouraging, with the government deciding to exercise the entire green shoe option. This provision allows the seller to issue or sell additional shares if investor demand is higher than expected. Retail investors and employees can now place bids on May 25th, 2026.

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, which is nearly 135% higher than the revised divestment estimate of ₹33,837 crore for FY26. The government had garnered ₹16,885.56 crore from disinvestment in FY26, compared with ₹10,163.02 crore in the previous fiscal year, with ₹28,420.49 crore raised through asset monetization in FY26.

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Currently, the government holds 89.27% stake in Central Bank of India, and following the exercise of the green shoe 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.

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.

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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.

Shares of Central Bank of India fell 8% to close at ₹31.22 on Friday.