India’s government has kicked off a two-day Offer for Sale (OFS) in Indian Overseas Bank (IOB), putting up to 3% equity on the block at a floor price of ₹34 per share—a move closely watched by traders, long-term investors, and anyone tracking the Centre’s broader push to dilute holdings in state-run enterprises.
The OFS opened on Wednesday, December 17, 2025, for non-retail investors, with the retail window scheduled for Thursday, December 18, 2025.
What happened to IOB shares on Dec 17, 2025
IOB stock came under pressure as the market digested the discounted stake sale and the additional supply coming via the exchanges. In early trade, reports showed the stock falling around 3%–4% intraday, reflecting typical OFS dynamics where the floor price is set below the recent market price to attract bids.
This reaction is not unusual: OFS announcements frequently trigger short-term volatility as investors reassess near-term price discovery, demand strength, and whether the government will exercise the additional (“greenshoe”) portion.
Indian Overseas Bank OFS details: stake size, dates, floor price, and broker
According to the official notice issued for the offer, the government (as promoter) is selling:
- Base offer:2% stake — up to 38,51,31,796 equity shares
- Oversubscription (“greenshoe”) option: up to an additional 1% stake — 19,25,65,898 equity shares
- Total potential sale:up to 3% (base + greenshoe)
Floor price:₹34 per share
Retail and employee discount:Nil (no extra discount category)
Seller’s broker:Goldman Sachs (India) Securities Private Limited
Where bids are placed: Through the BSE and NSE stock exchange mechanism
OFS timetable (who can bid and when)
- Dec 17, 2025 (T Day): Only non-retail investors can bid
- Dec 18, 2025 (T+1 Day):Retail investors and eligible employees can bid; non-retail investors may also carry forward unallotted bids (if they opted in)
How much money could the government raise?
The targeted proceeds depend on final demand and whether the greenshoe option is exercised.
- Market reports estimated the government could raise around ₹2,100 crore if it sells the full 3% at prevailing market levels around the announcement period.
- At the floor price of ₹34, the total deal size works out to roughly ₹1,964 crore for the full 3% (2% base + 1% greenshoe), based on the disclosed share quantities.
Why the government is selling IOB shares now
The OFS is widely seen as part of the government’s effort to move public sector companies toward minimum public shareholding (MPS) norms. IOB has an exceptionally high government holding, with the Centre owning 94.61% as cited in market coverage.
Regulatory reporting also notes that the offer is being undertaken, among other reasons, to achieve the minimum public shareholding requirement as prescribed under the relevant rules and SEBI’s framework.
Separately, syndicated reports have pointed out that SEBI has provided time-bound forbearance to CPSEs and public sector financial institutions, and several other PSU banks still have government stakes above the threshold—highlighting why periodic stake sales via OFS remain on the table.
Retail investors: what qualifies as “retail” in this IOB OFS
One of the most searched questions on OFS days is simple: “Can I apply as retail?”
For this offer, the notice defines a Retail Investor as an individual bidding for shares with total value not more than ₹2,00,000, aggregated across stock exchanges.
The same document states:
- A minimum of 10% of the offer shares is reserved for the retail category, subject to valid bids.
- A minimum of 25% of the offer shares is reserved for mutual funds and insurance companies, subject to valid bids at or above the floor price.
Price discovery: what “cut-off price” means in an OFS
OFS bidding happens through the exchange, and the final price is discovered based on demand.
Key points from the OFS notice:
- Retail investors may bid above the floor price and/or at a “cut-off price.” Business Standard+1
- The “cut-off price” is defined as the lowest price at which shares are sold in the non-retail category, based on valid bids received on T Day. Business Standard
- Allocation is done on a price-priority basis, and in oversubscription scenarios, allotment can be proportionate at a clearing price.
Importantly for this particular IOB sale, the notice specifies that retail and employee discount is nil, meaning there is no additional discount layer beyond the discovered price mechanism.
Employee reservation: what’s being offered and who can apply
The OFS also includes a small employee component.
- Up to 1,50,000 shares may be offered to eligible employees, subject to approvals and OFS guidelines.
- The notice indicates eligible employees may apply for shares up to ₹5,00,000, with specific bidding/allocation conditions described for the employee category.
The greenshoe decision: what to watch after the non-retail window closes
A major near-term trigger is whether the government exercises the oversubscription (greenshoe) option—the extra 1% stake that can be sold in addition to the base offer.
The notice states the seller will intimate the stock exchanges about its intention to exercise this option after trading hours (at or before 5:00 p.m.) on T Day.
In plain English: if non-retail demand is strong enough, the government can choose to sell more shares (up to the full 3%). If demand is weaker, it may stick closer to the base 2%.
How this fits into the wider PSU bank divestment trend
IOB’s OFS follows a pattern seen across state-run banks as the government gradually trims holdings and works toward public shareholding norms. Earlier in December, the government also executed an OFS in Bank of Maharashtra, reinforcing that PSU bank stake sales remain an active tool in the divestment playbook.
What happens next
With the non-retail portion live on Dec 17 and the retail window on Dec 18, market attention now shifts to three immediate signals:
- Demand levels in the non-retail book and the likely clearing price
- Whether the government exercises the 1% greenshoe option
- How IOB stock behaves once OFS-related supply is absorbed and price discovery completes
