Bank of India to raise Rs 3,000 crore through QIP, govt stake to come down

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Bank of India (BoI) is planning to raise Rs 3,000 crore equity via a qualified institutional placement (QIP). The proceeds would be used for developing an app for retail loans and offer bill discounting facility. The bank held a non-deal roadshow on Monday. During August, the bank held individual and group meetings for the roadshow, the bank said in a filing with BSE.

The bank said that 26 investors had participated in the roadshow, which included Yes Bank, IDFC Bank, HDFC Treasury, ICICI Prudential Life, SBI Life, Polunin, Marshal Wace, Federal Bank, Kotak Life and Mirae, among others.

Bank to focus on RAM (Retail, Agri and MSME)

The issue proceeds would also be used for improving the technical platform of the bank, co-lending digital operations, synching the tech platform with overseas and domestic operations, and partnerships with fintech companies, apart from using it as a fuel to grow business.

In order to maintain asset quality in the future, the bank is increasingly focusing on RAM (Retail, Agri and MSME) and GGA segments, with emphasis on the good rated and sovereign guaranteed advances, the bank said.

The government of India (GOI) currently holds a 90.34% stake in the bank as of June 30, 2021. The QIP issue will also bring down the government stake. Post the issue, Sebi guidelines for maintaining minimum public shareholding will be ensured, the bank said.

The bank has returned to profitability following back-to-back losses in 2018-19 and 2019-20. In the first quarter of the current financial year,  BoI earned a net profit of Rs 720 crore. In 2020-21, the bank reported a profit of Rs 2,160 crore. The bank reported a loss of Rs 5,550 and Rs 2,960 crore for FY 2019 and FY 2020, respectively.

The gross non-performing assets fell to 13.5% by June 30, 2021, from 13.8% in March 2021. In March 2020, the gross NPA was at 14.8% and in March 2019 it was at 15.8%.