HDFC Bank, Yes Bank eye stake in NCDEX unit

HDFC Bank and Yes Bank are likely to pick up around 10 per cent and about 3 per cent stake respectively in the National Collateral Management Services (NCMSL).

NCMSL is a collateral management company floated by the National Commodities and Derivatives Exchange of India (NCDEX) and the Geneva-based collateral management company, ACE (Audit Control and Expertise) Ltd.

Collateral management companies essentially certify and rate assets put up as collateral, which are also marked to market and reviewed regularly to ensure the sufficiency of the collateral throughout the period of loan transaction.

"HDFC Bank will pump in around Rs 1.5 crore to pick up around 10 per cent stake in the company," banking sources said. "Yes Bank is likely to pump in around Rs 50 lakh for the 3 per cent stake in NCMSL," he added.

"The collateral management company would provide lenders early warning signals in the event of deterioration of a borrowers repayment ability. This will enable a lender apply a lower capital risk weight to credit secured by collateral," said a senior private bank official.

The other stake holders in the company are Bank of India (8.82 per cent), Punjab National Bank (PNB) (13 per cent), Corporation Bank (8.82 per cent), Canara Bank (8.82 per cent), Indian Farmers Fertiliser Co-operative Ltd (Iffco) (13 per cent), Ace (5 per cent), NCDEX (11.5 per cent) and Haryana State Marketing Federation (10 per cent).

"We are planning to raise the paid-up capital from Rs 15 crore to around Rs 16.5 crore," said Hari Prasad managing director and chief executive officer, NCML.

The company will network and manage warehouses to help farmers and small enterprises in getting bank credit.