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Bank of Maharashtra to go private way

It assumes significance at a time when the Finance Minister, Nirmala Sitharaman had said on the Budget Day that the government will go for disinvestment in two of the State-run lenders

Bank of Maharashtra to go private way
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Bank of Maharashtra to go private way 

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Mumbai: Even as the central government is going for disinvestment in PSUs and State-run banks, the Pune-based State-run lender Bank of Maharashtra (BoM) has emerged as a prime contender for disinvestment.

This assumes significance at a time when the Finance Minister Nirmala Sitharaman had said on the Budget Day that the government will go for disinvestment in two of the State-run lenders. The government currently holds 93 per cent and 4 per cent with LIC. However, the government is likely to divest only 51 per cent and reap benefits in coming years of privatization on balance 42 per cent holding.

If a source is to be believed, then NITI Ayog and the Union Finance Ministry officials are likely to meet on April 14 to discuss privatization of Bank of Maharashtra (BoM). The bank's MD & CEO AS Rajeev said that the bank aims at growing at 10 per cent per annum which sounds well. He has further said that only Rs 1,000 cr loan book is required to be restructured now as against Rs 15,000 cr in 2016. "Full year expectation is Rs 5,000 cr, so at operating level stock is trading at 0.8 times, whereas valuation matrix suggests that deal even in the normal course happens at 5x of operating profits," Hemant Gupta, promoter founder of Denofwealth told Bizz Buzz. He expects very aggressive bidding from at least four financial powerhouses.

As per sources, three players are interested in this bank, which include Tata Capital, Bajaj Finance and CSB Bank.Interestingly, Bajaj Finance, which is Pune-based, could be an ideal suitor as BoM is also headquartered in the city, making easy to manage.

Total Biz Rs 26,6875 cr
Market cap Rs 13,000 cr
Liquidity coverage ratio 275% (RBI requirement 90%)
Net Interest Margin (NIM) 3.06% (2.86% a year ago)
CASA 50.91%
Provision coverage ratio 90%
Net NPA 2.59% (from 5.46% in Dec 19)
Total advances Rs 1,04,904 cr
Total deposits Rs 16,1971 cr


Kumud Das
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