Financial Daily from THE HINDU group of publications
Wednesday, Jul 20, 2005
Money & Banking
Public Sector Banks
Markets - Financial Services
Bank of India to take stake in broking firm
Mumbai , July 19
BANK of India has decided to invest Rs 5 crore in the equity of the Mumbai-based broking firm, Asit C. Mehta Investment Intermediaries Ltd.
The bank will acquire 5-10 per cent stake in the firm, it told the BSE on Tuesday.
The tie-up with the broking firm would enable the bank to provide its customers the opportunity to participate in the capital market, said Mr M. Balachandran, Chairman and Managing Director, Bank of India.
The broking firm offers services such as online trading in shares, spot financing, lending against demat shares, and IPO financing.
With the tie-up, the bank will now offer these products.
"There is widespread interest among retail investors in the equity market and they have to depend on a broking firm. Asit C Mehta has a long-standing reputation and a huge network. Customers can have the comfort of dealing without settling on reputation," said Mr Balachandran.
The bank has also approved the acquisition of 10 lakh equity shares of UTI Infrastructure and Services Ltd, a wholly owned company of the Specified Undertaking of UTI, at a cost of Rs 1 crore.
Mr Balachandran was speaking on the sidelines of a news conference to announce the launch of the inward remittance service jointly with Bank of New York, called `Star-e-Remit'.
According to the tie-up, remitters in the US can send money to India after registering at the Bank of India Web site. The money will be remitted to the recipient in India within 72 hours.
If the recipient is not an account holder with Bank of India, the amount will be remitted through mail transfer or demand draft. A maximum of $5,000 can be remitted at a time and up to three remittances can be done in a month. The cost is a flat rate of $8 per remittance.
As of now, the service is available only in the US, but the bank plans to extend it to the UK and West Asia soon, Mr Balachandran said.
Bank of India sees an inward remittance of about $500 million from the US alone every year, and it is likely to double with the launch of the service, said a bank official. The bank's share in the inward remittance business is about eight per cent.
To augment its Tier II capital, the bank is planning a bond issue to raise Rs 300 crore and has also got approval from shareholders to raise Tier I capital of Rs 100 crore through equity offering.
The capital adequacy ratio is currently about 11.53 per cent and the bank wants to maintain it at 12 per cent, Mr Balachandran said.
International business amounts to about Rs 24,000 crore, which accounts for 15 per cent of the operating profit, said a bank official.
On the overseas expansion plans, Mr Balachandran said that the bank has licences for expansion in China, Antwerp, Vietnam, and Doha.
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