Canara Bank seeks bids for 70% stake sale in Canbank Factors

Canara Bank has set a base price of Rs90 crore for its 70% stake in non-banking subsidiary Canbank Factors

Alekh Archana
Updated15 Sep 2017, 03:13 AM IST
Apart from Canara Bank, Andhra Bank holds 10% in Canbank Factors, while the remaining 20% is held by Sidbi. Photo: Mint
Apart from Canara Bank, Andhra Bank holds 10% in Canbank Factors, while the remaining 20% is held by Sidbi. Photo: Mint

Mumbai: State-owned Canara Bank plans to sell its entire 70% stake in non-banking subsidiary Canbank Factors Ltd, according to a tender on the bank’s website. 

The Bengaluru-based lender has invited bids from interested parties. The base price, a minimum realisation expected from the transaction, is set at Rs90 crore. 

Apart from Canara Bank, Andhra Bank holds 10% in the factoring company, while the remaining 20% is held by the Small Industries Development Bank of India (Sidbi).

“This is a part of the non-core asset sales exercise. The bank wants to sell the entire stake together and is not keen on partial stake sale,” said a person aware of the development, speaking on condition of anonymity. 

In fiscal 2017, Canbank Factors reported a total business turnover of Rs2,498 crore and incurred a loss of Rs39.8 crore due to provisioning for doubtful debts, according to information available in Canara Bank’s annual report. 

SBI Global Factors Ltd is known to be the leading player in the factoring business, according to analysts. 

Factoring, a leading source of funding mainly for small and medium enterprises, involves the sale of a company’s account receivables or invoices to a third party, a factoring company or a bank, at a discount.

The buyer, in turn, does the recovery as and when the invoice matures.

Usually, such a transaction is undertaken in order to meet the short-term liquidity of the firm. 

The start of the trading platform for trade receivables and bills of exchanges of micro, small and medium enterprises (MSMEs) has changed the dynamics of supply chain financing such as factoring. 

Under the electronic bill factoring exchanges facility, known as trade receivables discounting system, or TReDS, bills against large companies can be electronically accepted and auctioned so that the vendors can be paid promptly.

In November 2015, the Reserve Bank of India gave licences to three applicants to start TReDS. 

According to Sundeep Mohindru, founder of M1 Exchange, the TReDS platform, since it is an online system, it has led to better visibility, transparency, as well as price discovery, which eventually leads to a fall in cost of funds for the underlyi

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.MoreLess
HomeindustrybankingCanara Bank seeks bids for 70% stake sale in Canbank Factors

Most Active Stocks

Bharat Electronics

317.35
10:29 AM | 4 JUL 2024
2.8 (0.89%)

Godrej Consumer Products

1,366.05
09:59 AM | 4 JUL 2024
-1 (-0.07%)

Indian Oil Corporation

170.10
10:27 AM | 4 JUL 2024
0.8 (0.47%)

GAIL India

219.05
10:27 AM | 4 JUL 2024
-1.15 (-0.52%)
More Active Stocks

Market Snapshot

  • Top Gainers
  • Top Losers
  • 52 Week High

Garden Reach Shipbuilders & Engineers

2,670.00
10:25 AM | 4 JUL 2024
212.5 (8.65%)

Lupin

1,760.30
10:25 AM | 4 JUL 2024
129.5 (7.94%)

Housing & Urban Development Corporation

324.95
10:28 AM | 4 JUL 2024
23.1 (7.65%)

Concord Biotech

1,713.15
10:21 AM | 4 JUL 2024
121.75 (7.65%)
More from Top Gainers

Recommended For You

    More Recommendations

    Gold Prices

    • 24K
    • 22K
    Bangalore
    73,959.00188.00
    Chennai
    73,671.00-315.00
    Delhi
    73,671.00760.00
    Kolkata
    74,248.001,337.00

    Fuel Price

    • Petrol
    • Diesel
    Bangalore
    102.86/L0.00
    Chennai
    100.76/L-0.22
    Kolkata
    104.95/L0.00
    New Delhi
    94.72/L0.00
    OPEN IN APP
    HomeMarketsloanPremiumMint Shorts