Bank of India to seek new bids for STCI Finance stake

Government-owned Bank of India (BoI) is seeking new bids for selling its stake in STCI Finance, as bids in the previous round were below its expectation. 

The Mumbai-based lender is selling strategic investments to strengthen its capital adequacy. In August, it began a process to raise up to Rs 626 crore through sale of its stake, fully or partly, in the non-banking finance company. BoI holds 11.38 million shares in STCI, representing 29.96 per cent stake. 

STCI is a non-deposit taking non-banking finance company. Other institutional investors in it include State Bank of India with 10.32 per cent and IDFC Bank with a 9.29 per cent stake.

STCI Finance is one of BoI’s non-core investments which it has decided to monetise for raising resources. There is also a plan to raise capital through an equity offering but the timing is to be decided, BoI executives said.

STCI provides loans against shares, for construction finance and corporates. According to its annual report for 2016-17, the net profit was Rs 139.9 crore, from Rs 80.9 crore in 2015-16. Total income had risen to Rs 498.6 crore, from Rs 456.3 crore in FY16. The loan book was Rs 2,993 crore at end-March 2017, down from Rs 3,329 crore a year before. It wrote-off loans worth Rs 152 crore in the year.

While that hit the profit, the substantial dividend from subsidiary, STCI Primary Dealer Ltd (STCIPD) considerably improved the profit before tax for the year. Gross non-performing assets declined to 2.39 per cent of the profit at end-March 2017, from 5.14 per cent the previous year. Net NPAs dipped to 1.02 per cent, from 2.25 per cent a year before.

It has two subsidiaries, STCIPD and STCI Commodities (SCL). The former is engaged in trading of government securities, corporate bonds, money market instruments, interest rate swaps and trading in equity (both cash and futures). It also undertakes fee-based portfolio management and mutual fund distribution. SCL is a member of two of the largest online commodity exchanges, MCX and NCDEX, in addition to membership in the NCDEX Spot Exchange.