BOI Looks to Raise 626 cr with STCI Fi­nance Stake Sale

The Economic Times - - Money -

Mumbai: State-owned Bank of In­dia plans to raise at least ₹ 626 crore­by­sellin­gits30%stakeinSTCI Fi­nance, a move aimed at rais­ing cap­i­tal to grow its bal­ance sheet. The bank, which had re­ported losses for the past two fi­nan­cial years, is look­ing to sell its non-core as­sets to­boost its cap­i­tal. The bank haspu­ton­the­block­itsstake­and­has fixed Au­gust 22 as last day for bid­ding. It has in­di­cated that a meet­ing for the prospec­tive bid­ders with the man­age­ment of STCI Fi­nance will be ar­ranged on Au­gust 14.

Bank of In­dia has set a floor price of ₹ 550 per share for its 1.13 crore shares. STCI Fi­nance is a sys­tem­i­cally im­por­tant fi­nance com­pany which was orig­i­nally owned by the Re­serve Bank of In­dia as a pri­mary deal­er­ship com­pany. Bank of In­dia ac­quired ma­jor­ity stake in it from RBI and then ex­panded into a fi­nance com­pany.

STCI Fi­nance is a non-de­posit tak­ing fi­nance com­pany in which PSU banks own 78% stake. This 78% in­cludes Bank of In­dia’s 30% stake; of the 22% bal­ance, 15% is with other in­sti­tu­tions while in­sur­ance com­pa­nies hold 7%.

The cen­tral bank had di­vested its en­tire share­hold­ing in STCI in two stages. In 1997, it re­duced its stake from 50% to 14.4%, and then sold the rest in 2002 to the ex­ist­ing share­hold­ers. In April 2006, STCI took over UTI Se­cu­ri­ties Lim­ited from Spec­i­fied Un­der­tak­ing of Unit Trust of In­dia (SUUTI). In 2007, it hived off pri­mary deal­er­ship as a sep­a­rate 100% sub­sidiary.

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