Central Bank of India has enlarged the scope of operations of its wholly-owned subsidiary Centbank Financial Services Ltd (CFSL) so that corporate clients of the former don't go elsewhere to avail themselves of loan syndication and merchant banking services.
Among others, the subsidiary was so far acting as an executor of will, administrator of an estate, trustee for public, charitable and religious trusts, trustee of trusts created by policies issued under the Married Women's Property Act, guardian of minor's property, debenture trustee and also distributing mutual fund products.
Value-added services
The need for CFSL to diversify into loan syndication and merchant banking has been driven by two considerations — besides loans, corporate clients were seeking value-added services and the bank wanted the subsidiary's business to be self-sustainable.
To give a leg up to CFSL's operations, the bank has hired Mr John Mathew, a former Chief General Manager with the Export-Import Bank of India, to head the subsidiary as its Managing Director.
“We want to offer our corporate clients end-to-end financial services. From our bank, they can get term loans as well as working capital. However, if their resource requirement is large, we can organise loan syndication or help them raise resources via private placement of bonds and equity through Centbank Financial Services,” said Mr Arun Kaul, Executive Director, Central Bank of India.
Gets licence
CFSL recently obtained a Category-I merchant banking licence from the market regulator. The idea behind diversification is to open up new revenue streams.
Aggressive distribution of mutual fund schemes helped CFSL report a robust jump in net profit at Rs 4.32 crore in the year ended March 31, 2010, as against Rs 22 lakh in the previous year, a senior official said.
CFSL has engaged the services of a consultant to come up with suggestions for improving its work-flow efficiency, ensure regulatory compliance and proper maintenance of customer as well as internal records, besides strengthening its back-office operations and tightening audit.
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