Bank Of Maharashtra And Central Bank of India Are Likely To Raise Funds Via QIPs: Report

Top PSU lenders of India, Bank of Maharashtra Ltd. and Central Bank of India Ltd. are likely to raise funds by selling shares via qualified institutional placement (QIP), according to sources with exposure to the matter informed CNBC-TV18.

Per the sources, the Central Bank of India is expected to raise Rs 2,000 crore, while the Bank of Maharashtra is expected to raise Rs 5,000 crore through a Qualified Institutional Placement (QIP).

According to the sources, Bank of Maharashtra, in which the government owns an 86% stake as of the March quarter, is expected to sell 11.46% of its stake in order to be in line with the Minimum Public Shareholding (MPS) regulations by the financial year 2025 and 2026. The sources went on to say that the government will be aided in reducing its stakeholding in these institutions by the public sector banks' expected fund-raising efforts.

While the 18.08% needs to be sold for MPS, the government owns a 93.08% stake in Central Bank of India as of the March 2024 quarter.

The Hon'ble Finance Minister Smt. Nirmala Sitharaman received a dividend cheque for Rs. 857.16 crore from Bank of Maharashtra last week, on June 21, 2024. For FY'24, Bank of Maharashtra announced a dividend of Rs 1.40 per equity share. The bank's net profit for the fiscal year 2023-24 climbed to Rs 4,055 crore from Rs 2,602 crore, a 55.84% rise from the previous year. For the fiscal year 2023-2024, the Bank reported a 15.94% growth in overall business and a 15.66% boost in deposit collection.

With a primary focus on retail, agriculture, and the micro, small, and medium enterprise (MSME) segment (RAM segment), the bank has experienced substantial growth in its advances over the last four years, with advances (net) rising from Rs 86,872 crore as on March 31, 2020 to Rs 2,00,240 crore as on March 31, 2024 apart from growth in the corporate lending book.

The Indian banking sector grew its lending and deposits significantly in FY2023-2024, demonstrating its resiliency and enhanced asset quality. The Indian banking industry was robust in the face of global financial challenges. In spite of global uncertainty, the Indian banking industry preserved sufficient capital hedges and moderated non-performing loans (NPLs) throughout FY2024, preserving financial stability and credibility with stakeholders.