Copyright thehindubusinessline
Bank of Baroda (BoB) has put its plan to divest its majority shareholding and relinquish control in subsidiary Nainital Bank Ltd (NBL) on ice. In what seems to be a change of tack, the public sector bank (PSB) has provided NBL fresh capital, and strengthened its management structure and board. Bank of Baroda infused about ₹169 crore into NBL in the second quarter (Q2) of FY26, going by the latter’s balance sheet. During Q2 FY26, NBL’s subscribed capital increased by ₹48.28 crore, to ₹165.72 crore, and the share premium account jumped by ₹120.7 crore to ₹258.12 crore. It may be pertinent to mention here that RBI Governor Sanjay Malhotra last month said the proposed bar on overlap in businesses undertaken by a bank and its group entity is being removed. So, Bank of Baroda can continue to hold majority stake in NBL, going by the aforementioned observation. In December 2022, the bank’s Board of Directors had approved divestment of its majority shareholding in NBL. The PSB then invited an expression of interest for bringing in a strategic partner in NBL. Bank of Baroda currently holds 98.57 per cent stake in this subsidiary. Powering NBL In an interaction with businessline, Debadatta Chand, MD & CEO, said, “Strengthening NBL is one of our core strategies. We have provided fresh capital to this entity. “We have strengthened the Bank’s management structure by deputing a CGM (Chief General Manager) rank official as its MD & CEO. Earlier, a DGM (Deputy General Manager) used to be deputed as NBL’s chief.” Chand highlighted that NBL’s board has also been strengthened. “Currently, the entire effort is to make NBL strong....As on today, strengthening is the only thing that we are doing,” he said. As on September-end 2025, NBL’s gross advances nudged up 1.25 per cent year-on-year (yoy) to ₹4,864 crore from ₹4,804 crore as on September-end 30, 2024 . Total deposits were steady at ₹8,071 crore as on Sepember-end 2025, against ₹8,055 crore as on September-end 30, 2024. NBL’s net profit rose to ₹30 crore in Q2 FY26 against ₹28 crore in Q2 FY25. As at March-end 2025, the Bank had 173 branches, with majority of them being in Uttarakhand and Uttar Pradesh. PIM for NBL divestment The December 2022 preliminary information memorandum (PIM) for disinvestment of BoB’s majority stake in NBL noted that there is a good opportunity for NBL to bring in a suitable partner and leverage its growth potential by transforming itself from a traditional bank into a technology-based bank to enlarge presence and market share substantially. To achieve this, NBL needs additional capital to meet its business growth and capital expenditure for setting up new branches and improving infrastructure at the existing branches. The PIM underscored that raising capital by NBL will support its business growth, expand the branch network and upgrade infrastructure at the existing branches as per requirement. Moreover, it will help Bank of Baroda to reduce its stake in percentage terms, which will help meet the regulatory requirement. Over time, with increase in valuation of NBL, BoB can bring its stake further down in line with the regulatory norms through an initial public offering or further stake sale, etc, per the PIM. Published on November 3, 2025
