Government-owned Bank of India (BoI) is likely to exit from BOI Shareholding Ltd (BOISL), a joint venture set up in 1989, in which it has 51 per cent stake, with the remaining 49 per cent held by the Bombay Stock Exchange (BSE). The company's main function was to manage the clearing house activities of the exchange.
Earlier this financial year, in the annual general meeting of BSE, it was decided to transfer the clearing activities to its fully owned subsidiary, Indian Clearing Corporation Ltd (ICCL).
"ICCL will be a dedicated clearing house. It will be the central counterpart for all the settlements. So far, we were managing the settlements," said a source in the bank.
According to Reserve Bank of India (RBI), the maximum settlement should be through a central counterparty. ICCL will take over the entire settlement function, said the source.
ICCL will be functioning as a clearing house for BSE. It currently undertakes clearing and settlement services for the mutual funds and corporate debt segments of BSE.
It also undertakes clearing and settlement functions of the currency derivatives segment of the United Stock Exchange of India.
BOISL has a paid-up capital of Rs 2 crore. The company has been carrying out the rolling and weekly settlements of trades put through by member-brokers on the exchange. BOISL is also a depository participant of both the National Securities Depository Ltd and the Central Depository Services (India) Ltd, providing these services to the clearing members and investors.
Its annual report says it earned a net profit of Rs 2.7 crore during FY12 compared with Rs 4.4 crore during FY11. "The reduction in profit is due to payment of notional sick leave accumulations. R 385 changes relating to transactions (APC) reduced by the company at the request of BSE," the annual report said.
Sources said it was possible that BOISL would be wound up but the BSE has denied that. To an email on the query, a spokesperson replied, "There are no plans to wind up BOISL."
Valuation of the 51 per cent stake has not been done by the bank so far.
The source also said that there are possibilities that the bank might be given some stake in ICCL if BOISL was wound up.