State-run lender Bank of India will complete sale of its 29.96% equity stake in STCI Finance by August 31, two sources with direct knowledge of the matter said.
State-run lender Bank of India will complete sale of its 29.96% equity stake in STCI Finance by August 31, two sources with direct knowledge of the matter said. The sale is expected to add at least Rs 626 crore to the bank’s kitty. Earlier this month, the Mumbai-based bank had floated a request for proposal to sell 1.13 crore shares at a minimum price of Rs 550 per share. “BOI is proposing to sell its partial or entire stake in STCI Finance to unlock its value of its investment,” the bank had said in the RFP. This move is part of the bank’s strategy to sell stake in subsidiaries and other non-core assets to shore up its capital position amid rising bad debt in the Indian banking sector. “We will complete the sale by the end of this month. We are constantly looking at other non-core assets that we can sell,” a senior official of the bank who is not authorised to speak to the media said.
STCI Finance is a non-deposit-taking NBFC providing loans against shares, corporate loans against properties, construction finance and corporate loans. STCIFL has two wholly owned subsidiaries — STCI Primary Dealer and STCI Commodities.
Bank of India plans to raise Rs 8,000-crore capital this year, MD and CEO had said at the beginning of the month while announcing the first-quarter results. It has sought Rs 2,500-crore capital from the government this fiscal and plans to raise the remaining from the market.
The government has recently given the go-ahead for consolidation of public-sector banks and the larger banks planning to acquire smaller banks will need additional capital for this purpose. In the April-June quarter, Bank of India reported a net profit of Rs 87.71 crore, compared with a net loss of Rs 741.36 crore in the year-ago period, and a net loss of Rs 1,045.54 core in the previous quarter. Provisioning for bad loans fell to Rs 2,156.21 crore from Rs 2,452.61 crore a year ago and Rs 4,483.53 crore in the January-March quarter. In March, Bank of India had sold its 5% stake in credit information company TransUnion CIBIL for Rs 190.60 crore to TransUnion International. In 2016, the lender had sold its 18% stake in insurance joint venture Star Union Dai-ichi Life Insurance Company to its Japanese partner for about Rs 540 crore.