New Incentive Scheme For Brokers

Bank of India (BoI) has come up with a novel incentive scheme to increase the number of share applications for its forthcoming public issue.

According to the scheme, all brokers who procure 500 applications and more will receive an incentive of Rs 10 per application over and above their commissions. Sources at BoI said this scheme is the first of its kind in the Indian primary market.

BoI has come up with this scheme in order to procure a large number of applications for a smaller amount of shares which it expects to mop up from the Indian middle class.

 

The net public offer to the Indian public is Rs 315 crore. Sources said that the bank has already received firm commitments from non-resident Indians for over Rs 100 crore.

The bank is not keen on receiving applications for large numbers of shares from applicants. This is the reason why we have come up with this scheme, said the source.

BoI is expecting at least seven lakh applications from the Indian public which would translate into an outgo of Rs 70 lakh in the form of incentives paid to brokers.

The expenses of the issue payable by the bank inclusive of brokerage, fees payable to the lead managers, co-managers, advisor, auditors and other expenses have been estimated at Rs 39.38 crore which will be met out of the proceeds of the issue.

The earnings per share of BoI improved from Rs 0.26 for the 1994-95 fiscal to Rs 4.75 for the 1995-96 fiscal.