Union Territory Govt Stake In J&K Bank Increases To 74.2%

The Reserve Bank of India (RBI) has permitted the Jammu & Kashmir (J&K) government to obtain more than Rs 16.76 crore shares in Jammu & Kashmir Bank on a preferential basis. 

After this step, the equity stake of the J&K government will go up to 74.24 per cent in the bank. Meanwhile, this allotment follows a development when the J&K government decided to transfer an 8.23 per cent stake in the bank to the Union Territory of Ladakh. 

Earlier, the bank’s board also gave a green signal to a fundraise of up to Rs 2,000 crore via a combination of debt and equity. This also consists of raising the equity share capital of Rs 1,000 crore in one or more tranches. Apart from that, another Rs 1,000 crore via non-convertible Tier-2 bonds in the nature of debentures on the basis of the private placement. Talking about the LIC and East Bridge Capital Master Fund, they acquire around a 2 per cent stake each in the bank.

Meanwhile, in August the Securities and Exchange Board of India (SEBI) had freed the government of J&K from obeying its rules and regulations on the substantial acquisition of shares. SEBI also exempted the takeovers in the proposed acquisition during 2021-22, said the lender. 

Also, the Jammu and Kashmir Bank is the one of its kind in the entire country where the Union Territory government (which was the state government earlier) acquires a majority stake. 

During the Financial Year (FY)20, the bank had directed and allotted 15,65,92,546 equity shares to the J&K government on the basis of preferential rate.  

Apart from that, the advertiser of the bank, for cash at a cost of Rs 31.93 per equity share which included a premium of Rs 30.93 per share in the wake of getting the vital legal and regulatory approvals. By and large, the bank's advances expanded by just about 4 per cent to Rs 66,842 crore from Rs 64,399 crore. Along with that, the deposits increase to 10.50 percent to Rs 108,061 crore from Rs 97,788 crore during the FY March 2021.