Four major banks, including State Bank of India and ICICI Bank, have been appointed as the preferred banks for extending loans to employees of NTPC for investing in the power major's maiden public offer.
"SBI, ICICI Bank, State Bank of Hyderabad and Indian Overseas Bank have been shortlisted for providing loans to NTPC employees for subscribing to the issue," a senior NTPC official involved in the IPO process said on Wednesday.
NTPC proposes to allocate nearly 5 per cent of the equity shares or over 20 million shares to its employees through its public offer of 5.25 per cent. The issue is likely to hit the market in mid-September.
SBI chief general manager B K Gairola said the bank would provide loans to the NTPC employees at an interest rate of 7.25 per cent for subscribing to the issue.
SBI has been aggressively giving loans to employees of companies coming up with IPOs including state-owned firms including Gail and ONGC.
"In the ONGC offer, we disbursed Rs 60 crore (Rs 600 million), while in the Gail offering we sponsored nearly 80 per cent of employees," Gairola said.
SBI also provided loans to investors for the recently concluded Tata Consultancy Services IPO.
Apart from SBI, a few others like Indian Overseas Bank, UCO Bank and IDBI Bank also offered loans for TCS IPO.
IPO financing has caught the fancy among banks especially in the wake of excess funds worth about Rs 50,000 crore (Rs 500 billion) in the banking system and lack of credit growth in industrial and farm sectors, bank officials said.
Viewing the demand from retail investors, RBI has allowed banks to extend loans up to Rs 10 lakh (Rs 1million) to individuals for investing in an IPO.
Banks are increasingly involving into profitable retail initiatives like home loans and car loans. The new addition is IPO financing.
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