Public sector lender, Central Bank of India is planning to buy back the stakes of all its partners in the mortgage finance subsidiary by the end of current fiscal. The mortgage finance subsidiary of the bank runs under the name of Centbank Home Finance.

Unit Trust of India (UTI) which is one of the promoters of the mortgage finance subsidiary has agreed to sell the 16 % stake it holds to the bank, a senior bank executive said.

"The two other stake-holders, National Housing Bank (NHB) and Housing and Urban Development Corporation (Hudco), will put up the matter before their respective boards in the next few days. We are confident that we will complete the process by March 31," the executive added.

The offer price per share that the bank has proposed to its partners is Rs. 104.8 per share which equals to the book value of the shares.

Central bank holds a majority 59.5 per cent stake in the subsidiary. UTI and National Housing Bank (NHB) hold 16 per cent each. The remaining 8.5 per cent is held by Housing and Urban Development Corporation (Hudco).

The composition of Board of Directors is such that Central Bank nominates five directors on the board; Hudco, NHB and UTI nominate one director each.

The paid up capital of the finance subsidiary amounts to Rs. 20 crore. Its net worth is Rs. 48 crore. The year 2008-09 recorded a net profit of Rs. 3.18 crore for the company. The gross outstanding loans stood at Rs. 257.88 crore at the end of March.

It is apprehended that Central Bank will sell its mortgage finance subsidiary as the bank has started restructuring process of the company so as to raise its valuation, bank sources revealed.

As a measure to increase the profits of Centbank Home, the bank recently gave it a credit line of Rs. 100 crore that would be partly used to repay the entire debt of NHB.