Central Bank to raise Rs 660 cr

The money will be raised through conversion of perpetual non-cumulative preference shares held by the govt into equity shares

State-run Central Bank of India is in the process of raising Rs 660 crore through conversion of perpetual non-cumulative preference shares (PNCPS) held by the government into equity shares.

"We are converting our PNCPS into equity which will help us to raise around Rs 660 crore," the bank's Executive Director R K Goyal told PTI.

He said the bank is waiting for some of the approvals and may raise it within a week's time.

PNCPS are non-equity instruments which do not qualify to be counted for Tier-l capital of the banks.

The government has, in the past, infused capital by way of these instruments in public-sector banks.

In the current fiscal, the bank has raised Rs 1,208 crore in two tranches from Life Insurance Corporation of India (LIC) by allotting shares on a preferential basis.

In August, the lender had sold 7.10 crore shares to LIC and raised Rs 581.61 crore.

Earlier this month, it had raised Rs 626 crore by allotting over 8.28 crore shares to the life insurer on a preferential basis.

LIC now holds around 15 per cent stake in the bank.

The government's holding as of September 30, 2014 stands at 84.20 per cent in the city-based bank.

In order to raise funds, the bank has initiated the process to divest its stake in non-crore assets.

The lender is selling stake in its housing finance subsidiary Cent Bank Home Finance and Infrastructure Leasing and Financial Services (IL&FS), where it is one of the promoters.

In Cent Bank Home Finance, the bank holds over 60 per cent and in IL&FS it is having 8.34 per cent stake.

The bank has appointed ICICI Securities to find a potential buyer for its stake in housing finance business and SBI Capital for IL&FS stake.

The bank's Chairman and Managing Director Rajeev Rishi had earlier said that the bank needs Rs 2,000 crore capital in the current fiscal.

The city-based bank reported a net profit of Rs 103 crore in the July-September quarter as against a loss of Rs 1,509 crore in the year-ago quarter.