Central Bank of India plans to exit housing finance subsidiary
Mumbai: Feb 23 (PTI) State-run Central Bank of India is looking to sell its entire 64.40 per cent stake in its housing finance subsidiary Cent Bank Home Finance (CBHFL), a top bank official said.
The lender has floated a request for proposal (RFP) for appointing merchant bankers. The shortlisted bankers will help the lender scout for a potential investor to buy its stake in the mortgage financier. "We plan to exit from Cent Bank Home Finance. The bank already provides housing loans, and so, we feel that there is no need to have a housing finance subsidiary," Central Bank of India managing director and chief executive officer, Pallav Mohapatra, said.
The bank holds 64.40 per cent in the unlisted housing finance company, while the remaining stake is held by Housing & Urban Development Corporation, Unit Trust of India and National Housing Bank. The bank is facing operational curbs under the Reserve Bank's (RBI) prompt corrective action (PCA) framework. Mohapatra said the process of determining the valuation of the Bhopal-headquartered home finance company will begin as soon as the merchant bankers are appointed.
"Right now, it is difficult to say how much we will be able to realise through this disinvestment. Once the valuation is done, we will be in a better position to assess the amount we can raise. But, we expect a better valuation for CBHFL than its peers as it is a deposit-taking NBFC, he said. In 2016, the bank had tried to sell its entire stake in CBHFL, but the deal could not be concluded.
PTI had then reported that another state-run Bank of Baroda had shown interest in buying a majority stake in the mortgage lender. In 2016, the 64 per cent stake sale by the bank in its housing finance subsidiary could have fetched nearly Rs 250 crore, experts had said.
CBHFL's net owned fund stood at Rs 111.57 crore as on March 31, 2019. Its advances stood at Rs 1270.9 crore while deposits were at Rs 482.33 crore as of end March 2019.
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