This stock rose 16% today; here's why

It has gained 279.5 per cent in the last one year and risen 213 per cent since the beginning of this year

Representative Image Representative Image

Share of Centrum Capital rose 16 per cent to hit a fresh 52-week high of Rs 58.50 on BSE today after the company received "in-principle" approval from the Reserve Bank of India (RBI) to establish a Small Finance Bank (SFB).

"Resilient Innovations Private Limited (BharatPe) will be an equal partner," the company said.

"The SFB will be guided by the directions and timelines of the RBI on the amalgamation of Punjab & Maharashtra Co-Operative Bank Limited," it added.

The stock ended 4.98 per cent higher at Rs 52.75 against the previous close of Rs 50.25. Market cap of the firm rose to Rs 2,194.57 crore on BSE.

It has gained 279.5 per cent in the last one year and risen 213 per cent since the beginning of this year. The share stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200 day moving averages.

"The RBI would consider granting a license for commencement of banking business under Section 22 (1) of the Banking Regulation Act, 1949, on being satisfied that the applicant has complied with the requisite conditions laid down by RBI as part of "inprinciple" approval," RBI said.

"This "in-principle" approval has been accorded in specific pursuance to the Centrum Financial Services Limited's offer dated February 1, 2021, in response to the Expression of Interest notification dated November 3, 2020, published by the Punjab & Maharashtra Co-operative Bank Ltd., Mumbai," it added.

"We (the SFB joint venture) have set aside Rs 1,800 crore for the SFB, which eventually will be pumped into PMC once the government scheme for the merger is notified. Of the Rs 1,800 crore, Rs 900 crore will be invested in the first year by the joint venture split equally between the two and the remaining capital in stages," Jaspal Bindra, executive chairman of Centrum Group, told PTI.

Whether they will take over the more than Rs 6,500 crore of NPAs of PMC and also the over Rs 10,700 crore of its deposits, Bindra said that will be known only after the government notified the merger scheme. "What terms and conditions the government will set in the merger scheme will decide the fate of huge bad loans and losses. In fact, this is the only little unknown we have as of now," Bindra quipped.

"The RBI has given us 120 days to complete the other "fit and proper conditions" to seek the final licence, which I am very confident of meeting well in time. In fact, we will be seeking the final licence as soon as possible," he added.

Bindra, who was the group executive director and chief executive for the Asia Pacific at Standard Chartered Bank till 2015, joined Centrum in April 2016 as executive chairman and picked up around 25 per cent, also said they will surrender all their NBFC licences before launching the SFB.

(With inputs from PTI)