Informist, Thursday, May 19, 2022

--Bank of Baroda MD: Time is right to evaluate options on Nainital Bk 
--Bk of Baroda MD: To chart course of action on Nainital Bank in a qtr 

By Ajay Ramanathan and T. Bijoy Idicheriah 

MUMBAI - Bank of Baroda is set to evaluate options with regard to its 98.57% stake in Nainital Bank, so that they move towards compliance with the Banking Regulation Act and Reserve Bank of India regulations on shareholding, Bank of Baroda Managing Director and Chief Executive Officer Sanjiv Chadha said.

"I believe that the challenges that were there on account of COVID are behind for Nainital Bank. This is the time to evaluate options and see what is the best course forward. I think over the next few weeks, we will see what is the best option for that," he told Informist.

The Nainital Bank was founded in 1922 by freedom fighter Govind Ballabh Pant, with an aim to cater to banking needs of the people of the region. In 1973, the RBI directed Bank of Baroda to manage its affairs. Headed by Dinesh Pant, the bank currently has 164 branches operating across Uttarakhand, Uttar Pradesh, Delhi, Haryana and Rajasthan. 

In a peculiar anomaly, even though Bank of Baroda currently holds a 98.57% stake in Nainital Bank, the latter has been classified as a private bank. This is not in compliance with Banking Regulation Act or the RBI's norms on promoter holding in private banks, which is capped at 26-40%, depending on the type of promoter.

"Nainital Bank has been a part of the group for a long time, but it is obviously a situation which is not sustainable in terms of the Banking Regulation Act... I would suppose that if we were to meet a quarter from now, then possibly again, we would have some discussion on the board, we would have some sense of direction," he said.

Responding to a query on whether the choice would be to go for an initial public offering or rope in a strategic investor for Nainital Bank, Chadha said it was premature to comment on that, but Bank of Baroda would attempt to move towards compliance with the regulatory norms.

He said that the situation faced by Nainital Bank, like other lending institutions, in the wake of the COVID pandemic had now stabilised, and time was right to move forward on various options regarding Bank of Baroda's stake in the private lender.

Its total advances stood at 39.2 bln rupees as on Mar 31. 

At 1421 IST, shares of Bank of Baroda were down 3.8% at 96.65 rupees on the National Stock Exchange. 

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Vandana Hingorani

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