PSU lenders Bank of Maharashtra and Central Bank may soon raise up to Rs 5,000 crore and Rs 2,000 crore via QIP share issues, respectively, to cut government stake and meet public float requirements, reported CNBC TV18 citing unidentified sources. Both banks' boards are likely to approve the respective fund raises soon.
The Government of India hold as much as 86 percent equity stake in Bank of Maharashtra, and 93 percent in Central Bank of India. The calibrated fund raising will help PSU banks cut government stake.
Bank of Maharashtra could meet the minimum 25 percent public float norm over FY25 and FY26, said the report.
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Bank of Maharashtra stock opened gained on June 26, at Rs 65.5 in the opening trade, up 0.8 percent from the previous close. Central Bank share price too gained 0.7 percent to Rs 63.75.
Nidhu Saxena, MD and CEO of Bank of Maharashtra, said in an interview to CNBC TV18: "There is no urgent need to raise capital for growth. We have taken board approval for capital raising but have not decided on the deal size and timing yet. We will be mindful of the bottom line and pursue profitable growth."
Saxena expressed confidence in achieving high double-digit growth across various parameters. He also noted that there is scope to improve credit costs, which are expected to fall to 50-75 basis points. The bank aims to maintain a CASA (Current Account Savings Account) ratio over 50 percent in FY25.
Highlighting the bank's operational efficiency, Saxena mentioned that the cost-to-income ratio is currently at 37.5 percent, the lowest among Indian banks, with the highest per-employee business among PSU banks. The cost-to-income ratio is expected to remain below 40 percent in FY25. Despite this, the bank still has an accumulated loss of approximately Rs 6,000 crore.
Regarding the growth strategy, Saxena indicated that the corporate book would expand in sectors such as renewable infrastructure, lease rental discounting (LRDs), and government production-linked incentives (PLI). While being mindful of the quality of underwriting, he noted that stress is well managed, though some stress is observed in the agriculture and MSME sectors.
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