BoB plans to buy out NHB from housing arm by Sept

To merge company with itself to avoid in-house competition

Bank of Baroda (BoB) will complete the acquisition of National Housing Bank's 33 per cent stake in BoB Housing Finance and merge the company with itself by September, according to P S Shenoy, chairman and managing director.

While NHB, being the regulator of housing finance companies, wants to exit on account of interest conflict, the bank wants to merge the subsidiary as both are competing with each other for the same business, that is, home loans.

"We are negotiating with NHB on the issue of fair valuation of its holding in BoB Housing," Shenoy said after a memorandum of understanding was signed between the bank and National Insurance Company Ltd for selling general insurance products through the bank's network.

BoB holds 67 per cent stake in the housing arm, which was incorporated in December 1990. NHB had picked up 33 per cent stake as part of its efforts to seed the housing finance business in the country.

BoB has a home loan portfolio of about Rs 3,200 crore and its subsidiary's portfolio is Rs 550 crore.

Shenoy said this fiscal the bank plans to float a stock broking arm in association with three to four parties.

The bank's plan to start its life insurance company has taken a back seat. It is seeking to gain experience as a corporate agent under the bancassurance formula for life and non-life companies before taking the plunge.

On the growth target for the fiscal, Shenoy said he expected net and operating profits to grow by 25 per cent, while deposits and advances are expected to rise by 20 per cent.