New Delhi: Bank of Baroda (BoB) has decided to hire a strategic partner for its subsidiary, Nainital Bank Ltd. With this, the public sector bank is planning to divest its majority stake and relinquish its control of the subsidiary. The move is also aimed at creating more value in the NBL and also take it to a next level of growth and standing in the banking industry. At present, BoB holds 98.57 percent stake in the Nainital Bank, reported the BusinessLine.
Inviting expression of interest, BoB in its preliminary information memorandum (PIM) said that NBL needs additional capital to meet its business growth and capital expenditure for setting up new branches and improving infrastructure at the existing branches.
"There is a good opportunity for NBL to bring in a suitable partner and also leverage its growth potential by transforming itself from a traditional bank into a technology-based bank to enlarge presence and market share substantially," said the PIM.
"The strategic partner will help BoB to reduce its stake in percentage terms, which will help meet the regulatory requirement," said the report by BusinessLine.
"Over time, with increase in valuation of NBL, BoB can bring its stake further down in line with the regulatory norms through an initial public offering," reported the BusinessLine.
As at March-end 2022, NBL had deposits and advances of Rs 7,486 crore and Rs 4,211.79 crore, respectively. The net profit of NBL rose to Rs 28.93 crore in FY22, against Rs 1.26 crore in FY21.
(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)