Canara Bank to pick up 7% in CDSL

Canara Bank is picking up around 7 per cent stake in Central Depository Services Ltd (CDSL), one of the two depository participants in the country. Canara Bank will pick up the stake from BSE, the original promoter and the single biggest stake holder in CDSL.

Sources in CDSL informed that the discussion is in the final stages between BSE, Canara Bank and CDSL about the entry of Canara Bank in CDSL as one of the promoters. BSE now holds around 43.05 per cent stake in the depository with an investment of Rs 45 crore.

After the proposed stake sell, BSE's holding will come down to 36 per cent. Canara Bank will be the 10th bank to pick up stake in CDSL. Bank of India, Bank of Baroda and SBI hold 9.5 per cent each in CDSL.

Besides, HDFC Bank, Standard Charterd, Union Bank of India, Canturian Bank and Bank of Maharastra hold equity stake in the depository. The Calcutta Stock Exchange too holds around one per cent in CDSL.

According to sources, the bank will be acquiring 67.5 lakh shares of CDSL at a price of Rs 11.12 per share. The deal is valued at Rs 7.5 crore and will give close to 7 per cent to the Canara Bank.

"This is for the first time that CDSL shares is being sold at a premium. BSE has asked for the premium as now the depository is doing extremely well," sources said.

CDSL sources informed that the depository had a dream run along with NSDL, the leading depository in the country, in the last nine months. The number of DP accounts has increased from 6.29 lakh in March 2004 to 9.63 lakh till February 2005. "We are likely to reach one million mark by April," said sources.

CDSL has also added 62 new DP registration from banks and brokers since April 2004. It currently have 266 Dps offering services from 1,500 service points across the country.

"More and more banks are interested to pick up stake in CDSL as the banks see demat as a fee based income avenue. The depositors in the banks are also becoming interested about the capital market following the bullish market," sources added.