Bank of India to pare stake in STCI Finance to meet RBI's proposed norms

A senior BoI executive told Business Standard that RBI's draft norms propose that banks engaged in the same activity as NBFCs should reduce their stake

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2 min read Last Updated : Mar 03 2025 | 8:01 PM IST

Public sector lender Bank of India (BoI) plans to offload part of its stake in STCI Finance Ltd, a non-banking financial company (NBFC), to meet the Reserve Bank of India’s (RBI) proposed norms that cap banks’ stake in NBFCs at 20 per cent.

Bank of India, with a 29.96 per cent holding (investment of Rs 130.10 crore), is the largest stakeholder in STCI, which has an equity share capital of Rs 380 crore, according to BoI’s annual report for FY24. The bank has floated an expression of interest (EOI) document for the proposed divestment of its stake.

A senior BoI executive told Business Standard that RBI’s draft norms propose that banks engaged in the same activity as NBFCs should reduce their stake.

“The bank will bring down the stake to a level permitted under RBI’s draft norms,” the BoI executive added. The bank has yet to finalise a deadline for reducing its stake. Earlier, in 2017, the bank had attempted to sell its stake in STCI Finance, but the deal did not materialise.

BoI is the second lender, after private lender Axis Bank, to signal intent to exit from Axis Finance, an NBFC. The Mumbai-based bank is believed to have begun the process of scouting for prospective buyers.

According to STCI Finance Ltd’s annual report for FY24, considering the prevailing operating environment, it consciously moderated its loan book growth in the reporting year following two years of high credit growth in the post-pandemic period of FY22 and FY23. As a result, total loan disbursements stood at Rs 1,224 crore in FY24, compared to Rs 1,281 crore in FY23.

The loan book rose marginally from Rs 2,403 crore as on March 31, 2023, to Rs 2,603 crore as on March 31, 2024. The loan-against-shares segment constituted 29 per cent of the loan book at the end of March 2024 (FY24), down from 33 per cent as on March 31, 2023.

The real estate corporate loan segment constituted 23 per cent in FY24, compared to 24 per cent in FY23. The share of lending to NBFCs rose to 19 per cent in FY24, up from 17 per cent in FY23.

STCI Finance Ltd posted a net profit of Rs 139.09 crore in FY24, compared to Rs 139.13 crore in FY23.