PSBs oppose stake dilution via ETF

Lenders wary of the move as they see it clashing with fund-raising plans

Public sector banks (PSBs) are resisting the Central government’s move to include them in the new exchange-traded fund (ETF).

According to sources, all the state-owned lenders have expressed concern that divestment by the government in the proposed new ETF could impact their public sector character and complicate capital-raising plans.

After the success of the first Central Public Sector Enterprise (CPSE) ETF, the government is looking to launch an ETF with banks and other public sector undertakings (PSUs) as the underlying. Having banks as part of the ETF will entail the government divesting some portion of its holding in them.

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