Sebi exempts govt from making open offer for Central Bank
The government has proposed to acquire about 30.84 crore shares of the bank through preferential allotment. This would increase the government's holding in the bank from 79.15 per cent to 85.31 per cent.
In an order issued yesterday, Securities and Exchange Board of India (Sebi) said "this is a fit case to grant exemption...to the Government of India from the obligation to make an open offer".
The regulator said the government which is expected to infuse Rs 2,406 crore into the Central Bank of India would enable the PSU lender to achieve the 8 per cent 'Capital to Risk-weighted Assets Ratio (CRAR)' as per the BASEL II norms.
"Higher CRAR is a factor that represents that a bank or a financial institution has sufficient capital in order to keep it out of financial difficulty and protect the interest of its depositors and in turn the economy," Sebi said.
Further, the issue price of Rs 78 per share is found to be in accordance with regulations on 'Issue of Capital and Disclosure Requirements', it said.
"The target company (the bank) has also undertaken that the capital raised through the preferential allotment to Government would not be used by it for making investment in whatever form, in any of its subsidiaries, joint ventures etc," Sebi said.
It also observed that the hike in the stake of
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