The Indian government is set to divest a portion of its stake in Bank of Maharashtra , a public sector bank, according to recent reports. This move is part of the government's ongoing efforts to raise funds and potentially improve the bank's market presence.

Key Details of the Proposed Divestment

Implications for Investors and the Bank

The proposed stake sale at a discounted price could have several implications:

1. Investor Opportunity: The discounted entry price may attract new investors to the public sector bank, potentially broadening its shareholder base.

2. Government Strategy: This move aligns with the government's broader strategy of divesting stakes in public sector enterprises to raise funds.

3. Market Dynamics: The discounted offering might influence the bank's stock price in the short term, as markets adjust to the new supply of shares.

4. Shareholding Structure: Post-divestment, there will be a slight shift in the bank's ownership structure, with a marginal decrease in government holding.

It's important to note that while this development represents a significant move for Bank of Maharashtra, the exact impact on the bank's operations and long-term strategy remains to be seen. Investors and market watchers will likely keep a close eye on how this divestment unfolds and its implications for the banking sector at large.

As always, potential investors should conduct their own research and consider their financial goals before making investment decisions based on this news.

S&P Global Ratings has reaffirmed Bank of Maharashtra 's (BoM) BBB long-term and A-2 short-term issuer credit rating with a stable outlook. This rating action underscores the bank's strong capitalization and the high likelihood of government support, despite its higher risk appetite compared to peers.

Key Highlights

• Credit Rating: BBB long-term and A-2 short-term issuer credit rating
• Outlook: Stable
• Strengths: Strong capitalization, solid deposit base, and high likelihood of government support
• Challenges: Higher risk appetite and credit losses compared to industry average

Financial Performance

Bank of Maharashtra has demonstrated robust financial performance, as evidenced by its recent financial data:

Capitalization and Risk Profile

S&P Global Ratings expects BoM's risk-adjusted capital (RAC) ratio to strengthen to 10.5%-11.0% over the next two years, up from 10% as of March 31, 2025. This improvement is anticipated despite projected loan growth of 14%-16% per annum, which is higher than the industry average.

The bank's higher risk appetite is reflected in its loan portfolio concentration and above-average credit growth. Credit losses are expected to remain at about 1.0% of customer loans over the next two years, compared to an industry average of 0.8%-0.9%.

Funding and Liquidity

BoM's funding profile remains strong, supported by:

• A stable deposit base primarily composed of granular retail deposits and public-sector deposits
• Current and savings account (CASA) deposits at 50.4% of total deposits as of September 2025
• A loans-to-deposits ratio better than peer average, indicating strong deposit mobilization capabilities

Government Support

S&P Global Ratings classifies Bank of Maharashtra as a government-related entity with a very high likelihood of extraordinary government support in the event of financial distress. This assessment is based on:

• The government's 79.6% stake in the bank as of June 30, 2025
• BoM's important role in the government's financial inclusion objectives
• The perception of government-owned banks as a unified public sector bank family

Outlook

The stable outlook reflects S&P's expectation that Bank of Maharashtra will maintain its solid capital position and continue to receive strong government support over the next two years. The bank is also expected to sustain its robust funding and liquidity, supported by high customer confidence.

While BoM faces challenges in terms of its higher risk appetite and credit losses compared to peers, its strong capitalization and government support provide a solid foundation for its operations in the Indian banking sector.

About Bank of Maharashtra

Bank of Maharashtra, established in 1935, is a public sector bank with a growing pan-India presence. As of March 2025, it held a market share of about 1.2% in loans and 1.3% in deposits in the Indian banking sector. The bank continues to focus on expanding its digital presence and calibrated branch expansion to cater to various customer segments across the country.