Central Bank of India (NSEI:CENTRALBK) has approached the government with a proposal for an offer for sale (OFS) instead of a fresh issue of equity through routes like qualified institutional placement (QIP) or a rights issue. It has chosen to take the OFS route to avoid dilution of its equity capital base while increasing the public float of shares. The government has a little over 93% in the Mumbai-based bank at the end of December 2023.

M V Rao, managing director and chief executive, said the bank was confident on this issue (OFS). ?Otherwise, there is no point in diluting its (capital) base further where actually the capital position is very strong and liquidity is adequate,? Rao said.

Central Bank of India?s stock closed 2.95% higher at INR 56.21 per share on BSE. The capital position will be adequate for credit growth that the bank is envisaging for the next year (FY25) without going to the market through rights or QIP, Rao said in an analysts' call after Q3FY23 results. Its capital adequacy ratio stood at 14.74% with a Common Equity Tier I (CET-1) of 12.17% at the end of Q3FY24, up from 13.76% with CET-1 of 11.92% a year ago.

?The public float in the market (of bank shares) has to improve. Instead of diluting equity first, we would like to see that the float in the market (of bank shares) has to improve. For that, this is one route (OFS) that we are exploring.

So, there will not be any dilution of earnings per share and also see that the float in the market moves up,? he added.