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Home > Business > PTI > Report

BoB to merge housing finance arm

September 15, 2003 12:54 IST

Bank of Baroda is likely to merge its housing finance arm with itself in view of duplicating loan portfolio and increased cost of deposits and the need to maintain separate capital adequacy for BoB Housing Finance (BOBHFL).

"We are considering the merger of BoB Housing Finance," BoB Executive Director and chairman of BOBHFL, A K Khandelwal, said.

With total assets of over Rs 482 crore (Rs 4.82 billion), the housing arm, which made a net profit of over Rs 11 crore (Rs 110 million), has reserves and surplus of over Rs 56 crore (Rs 560 million) as on March 31, 2003.

Headquartered in Jaipur, Bank of Baroda has about 67 per cent stake in the housing finance arm and the remaining stake is with National Housing Bank.

He, however, declined to comment on the nitty gritties and whether there would be premium while buying the stake from NHB, but said the "merger might be possible within a year."

BOBHFL has 23 branches across nine states in the country with a total staff strength of 74.

The move to merge the housing finance arm comes in the wake of the parent BoB already having a housing loan portfolio of Rs 600 crore (Rs 6 billion), and the subsidiary's cost of borrowings being high.

In the light of keeping a separate capital adequacy ratio, many banks, including Andhra Bank, were planning to merge the housing finance subsidiaries.

As per the National Housing Bank, the refinance entity for the housing finance companies, the CAR is pegged at 12 per cent of the Net Demand and Time Liabilities.

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