The Reserve Bank of India (RBI) has allowed the federal government of Jammu & Kashmir to accumulate over 16.76 crore shares in Jammu & Kashmir Bank on a preferential foundation. The J&Ok authorities’s fairness stake will rise to 74.24 per cent within the financial institution after the allotment. The subject follows a current choice of the J&Ok authorities to switch 8.23 per cent stake within the financial institution to the Union Territory of Ladakh.
“The RBI vide its letter dated September 2, 2021, has accorded approval to government of Jammu & Kashmir to acquire 16,76,72,702 fully paid-up equity shares on preferential basis, i.e., up to 74.24 per cent of the post issue paid-up voting equity capital of the bank subject to compliance of regulatory requirements,” J&Ok Bank mentioned in a submitting with inventory exchanges on Friday.
Earlier this week, the financial institution’s board accredited a fund increase of as much as Rs 2,000 crore by means of a mixture of debt and fairness. This consists of elevating of fairness share capital as much as Rs 1,000 crore in a number of tranches and one other Rs 1,000 crore by means of non-convertible Tier-2 bonds within the nature of debentures on a non-public placement foundation. LIC and East Bridge Capital Master Fund maintain round 2 per cent stake every within the financial institution.
In August, the lender had mentioned that the Securities and Exchange Board of India (Sebi) had exempted the Jammu & Kashmir authorities from complying with its norms on substantial acquisition of shares and takeovers within the proposed acquisition throughout 2021-22.
The authorities of Jammu & Kashmir is infusing fairness capital as much as Rs 500 crore. The financial institution will allot 16,76,72,702 fairness shares at Rs 29.82 a bit. Post the preferential allotment, the Union Territory authorities’s shareholding will enhance from 68.18 per cent to 74.24 per cent. Since the change in shareholding by 6.06 per cent is in extra of 5 per cent of the fairness paid up capital of the financial institution, it attracted the supply of the Takeover Regulation, necessitating a Sebi exemption.
J&Ok Bank is the one financial institution in India the place the Union Territory (earlier state authorities) authorities holds a majority stake.
As per the Jammu and Kashmir Reorganisation Act 2019, the Central authorities has deliberate the apportionment of property and liabilities of the erstwhile state of Jammu and Kashmir between newly-created Union Territories of J&Ok and Ladakh.
Earlier in July, the RBI had accorded its approval to the Government of the Union Territory (UT) of Ladakh to accumulate 8.23 per cent of the paid-up fairness capital of J&Ok Bank as on the date of enforcement of Jammu and Kashmir Reorganisation Act, 2019 (October 31, 2019). The transfer adopted the Government of Jammu and Kashmir’s order on October 30, 2020, concerning the switch of 8.23 per cent shareholding (about 4.58 crore fairness shares) in J&Ok Bank as of October 31, 2019, to the UT of Ladakh.
Earlier this 12 months, the Anti Corruption Bureau (ACB) arrested Parvez Ahmad Nengroo, former Chairman and Managing Director of J&Ok Bank, who was faraway from the submit in reference to alleged unlawful allotment of tenders for housekeeping that led to lack of crores of rupees to the financial institution.
During FY20, the financial institution had issued and allotted 15,65,92,546 fairness shares on preferential foundation to the federal government of Jammu and Kashmir, the promoter of the financial institution, for money at a value of Rs 31.93 per fairness share — together with a premium of Rs 30.93 per share — after acquiring the mandatory statutory and regulatory approvals. Overall, the financial institution’s advances elevated by virtually 4 per cent from Rs 64,399 crore to Rs 66,842 crore, whereas the deposits rose 10.50 per cent from Rs 97,788 crore to Rs 108,061 crore in the course of the 12 months ended March 2021.
