Central Bank of India is planning to sell off its housing finance subsidiary Cent Bank Home Finance Ltd. The bank has hired ICICI Securities as merchant banker to identify a buyer. "We have identified the housing finance company as a non-core business so we will sell it off. ICICI Securities has been appointed to find a buyer. The bank is booking home loans in its portfolio so there is no need to replicate the business," a senior bank official said. The bank has booked about Rs 500 crore of home loans in this subsidiary.
Cent Bank Home Finance Ltd is a registered housing finance company with National Housing Bank. It was incorporated as Apna Ghar Vitta Nigam Ltd and later rechristened as Cent Bank Home Finance Ltd. It commenced operation on June 18, 1991. The other share holders in CBHFL are Housing & Urban Development Corporation (HUDCO), Unit Trust of India (UTI), and National Housing Bank (NHB).
The finance ministry has asked banks to sell off their non-core assets so that they can focus on their cor-competency and remain profitable. Banks are in the process of identifying non-core business. For the second quarter ended September 30, 2014, Central Bank reported profits on lower provisioning. Net profit for the quarter amounted to Rs 103 crore, against a loss of Rs 1,509 crore a year ago. Provisions and contingencies of the bank has come down to Rs 708 crore from Rs 2,049 crore a year ago. Bank reported slippages worth Rs 540 crore in this quarter as against Rs 1,704 crore a year ago. The bank was able to upgrade loans worth Rs 1,119 crore during the quarter and recover Rs 239 crore of bad loans. It also sold off Rs 267 crore worth of bad loans to asset reconstruction companies and wrote off Rs 88 crore.
Total Advances stood at Rs 1,86,319 crore against Rs 1,78,628 crore in September 2013, recording year-on-year growth of 4.31%. The bank's net interest income (NII) rose 27% to Rs 1,827 crore from Rs 1,437 crore in September 2013. Central Bank's other income rose 6% to Rs 403 crore from Rs 378 crore a year ago.
A bank official said, "However, the incremental credit growth of the bank is negative as it is bring down its corporate advances to stem the tide of bad loans. The corporate advance of the bank is down 12.15% over corresponding period a year ago. We are focusing on retail advances."
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