VoteUpIndia

IDBI Bank has dropped its plan to sell its housing finance unit—IDBI Homefinance—and has decided to merge it with itself.

The board of the state-owned lender has approved, in-principle, to merge a wholly-owned subsidiary of the bank, with the bank itself.

Talking to FE on the sidelines of the sixth annual general meeting of the bank, which was held in Mumbai on Thursday, executive director of the bank RK Bansal said it made a better sense as the company was small having an outstanding loans of Rs 3,000 crore only at the moment.

“On the other, at IDBI Bank, we are having a home loan portfolio of Rs 1,6000 crore. So, it will help us strengthen our home loan portfolio. Also, we thought that when we had taken it over from Dewan Housing Finance , then we were a development finance institution and now we have come a long way by developing ourselves as a full-fledged bank.

Hence, we felt that we were competing somewhere with our own entity. Therefore we decided to merge it with ourselves,” he said Bansal. The bank passed resolutions at the AGM, for increasing the authorised capital of the bank to Rs 2,000 crore fromRs 1,250 crore, and to raise additional capital.

Accordingly, the board of the bank considered and approved preferential issue of 2,59,509,110 equity shares of Rs 10 each at a price of Rs 120.19 per share (comprising of Rs 10 face value and Rs 110.19 share premium amount) aggregating to Rs 3119.04 crore to the government.

[Story Source]

This post was submitted by komal.