Shares of Central Bank of India fell more than 6% on Friday after the Government of India announced plans to dilute up to an 8% stake in the state-run lender through an offer for sale (OFS). The Centre currently owns 89.27% stake in the PSU lender.

Reacting to the news, shares of Central Bank of India tumbled as much as 6.34% to ₹31.76 on the BSE, dragging its market capitalisation down to ₹28,747.25 crore. The PSU bank stock opened at ₹32.21, lower than its previous close of ₹33.91.

The counter saw strong volume with around 15.64 lakh shares changing hands on the exchange by 12 pm, sharply higher than the two-week average of 4.09 lakh shares.

Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla said the Centre will initially divest a 4% stake, with an additional 4% available under a greenshoe option depending on investor demand.

"Government offers to disinvest 4% equity in the Central Bank of India with an additional 4% as green shoe option," Chawla said in a post on X.

The OFS opened for non-retail investors on Friday, while retail investors and eligible employees can place bids on May 25.

According to the offer document, the floor price has been fixed at ₹31 per share, representing a discount of more than 8.5% to Thursday’s closing price of ₹33.91 on the BSE.

Under the base issue, the government plans to sell over 36.2 crore equity shares, equivalent to 4% of the bank’s paid-up equity capital. If the greenshoe option is fully exercised, the total transaction size could reach nearly ₹2,455 crore based on the previous closing price.

The government has reserved at least 10% of the OFS for retail investors, while 75 lakh shares have been set aside for eligible employees. Employees can apply for shares worth up to ₹5 lakh and may also participate in the retail category within prescribed limits.

The non-retail portion of the OFS will remain open between 9:15 am and 3:30 pm on May 22, with investors allowed to carry forward unallocated bids to the next trading day. Retail investors and employees will be able to bid during the same time window on May 25.

The offer document also stated that at least 25% of the shares allocated to non-retail investors will be reserved for mutual funds and insurance companies, subject to valid bids being received at or above the floor price.

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