Canara Bank has initiated the process of seeking regulatory approval to convert its software services and products subsidiary into a non-banking finance company (NBFC). After this conversion, the bank will hive off its credit card division and move to the NBFC.
According to K Satyanarayana Raju, MD & CEO, Canara Bank, as part of the exercise to transform the subsidiary (Canbank Computer Services Ltd/CCSL) into a wholly-owned NBFC, the bank will buy out the 30.86 per cent stake collectively owned by Bank of Baroda (BoB), Karur Vysya Bank (KVB) and DBS in CCSL.
He said the valuation exercise for buying out the stake of BoB, KVB and DBS in CCSL is currently on.
“While our bank has over 11 crore customers, the credit card base in only 8.64 lakh (as at March-end 2024). Hiving off our credit card wing to the NBFC will ensure that this business gets focussed attention.
“We want to grow the credit card customer base to 1 crore in the next seven to eight years,” Raju said.
In a recent earnings call, the Canara Bank chief emphasised that the bank focuses more on improving value of its investments, whether through subsidiaries or the bank itself.
By seeking to house the credit cards business in a separate subsidiary, the Bengaluru-headquartered public sector bank (PSB) seems to be taking a leaf out of peer PSBs. State Bank of India and BoB have subsidiaries for their credit cards business.
CCSL is the only software company to be promoted by a PSB. Started in 1994 to provide IT solutions (software development, IT-enabled services, BPO services, and share transfer agency) for the financial services industry, the company has extended its focus to other areas like e-Governance.
Canara Bank, India’s fourth largest PSB (with total global business -- deposits plus advances -- of ₹22,72,968 crores as of March 2024) has a majority 69.14 per cent stake in the company.
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