Central Bank Of India Plans To Sell Home Loans Arm Cent Bank Home Finance
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Central Bank Of India Plans To Sell Home Loans Arm Cent Bank Home Finance

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State-run Central Bank of India is looking to sell its entire stake in its housing finance subsidiary Cent Bank Home Finance, a top bank official said.

The lender has floated a request for proposal for appointing merchant bankers, which will help it scout for a potential investor.

"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," Pallav Mohapatra, managing director and chief executive officer at Central Bank of India, told Press Trust of India.

The bank holds 64.40 percent in the unlisted housing finance company, while the remainder is held by Housing & Urban Development Corporation, Unit Trust of India and National Housing Bank. Central Bank of India is presently under the Reserve Bank of India’s prompt corrective action 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 Cent Bank Home Finance than its peers as it is a deposit-taking NBFC,” he said.

To be sure, the bank had in 2016 tried to sell its entire stake in Cent Bank Home Finance, but the deal could not be concluded. Bank of Baroda had shown interest in buying the stake worth Rs 250 crore then, PTI had reported at that time.

Cent Bank Home Finance was incorporated as 'Apna Ghar Vitta Nigam Ltd' and was subsequently renamed as 'Cent Bank Home Finance Ltd.'. It commenced operations in June 1991. The home loan financier has presence in nine states through 18 branches.

Central Bank of India is also in the talks to sell its 20 percent stake in Indo Zambia Bank to garner around Rs 60 crore. The other stakeholders in the bank include Bank of India and Bank of Baroda with 20 percent stake each, and the Zambian government owning the balance.

"We are in talks with BoB and BoI to buy our stake in the bank," Mohapatra had told reporters after the announcement of the bank’s December quarter results.

The bank is also targeting to raise Rs 200 crore in the current quarter by monetising its real estate properties.

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