PNB's fund-raising could help bolster the bank's capital adequacy ratio from 9.73%, below RBI norms, with Tier-I ratio at 7.49% at the end of March 2019.
Punjab National Bank will seek the approval of its board next week to raise Rs 5,000 crore in equity capital. In a notice to the exchanges, the bank listed qualified institutional placements, follow-on public offer or a rights issue among instruments available to raise funds, though it made no mention of a timeframe.The board is scheduled to meet on July 25.
Following release of the bank’s March quarter results, managing director Sunil Mehta already indicated that the bank’s intention to tap the market for Rs 5,000 crore to meet capital requirements for the current financial year. He had pegged the bank’s total capital requirements at Rs 10,000 crore for FY20.
PNB’s fund-raising could help bolster the bank’s capital adequacy ratio from 9.73%, below RBI norms, with Tier-I ratio at 7.49% at the end of March 2019.
Over the last five financial years, PSBs were recapitalised to the extent of `3.19 lakh crore,with infusion of approximately `2.5 lakh crore by the government and mobilisation of over `66,000 crore, Parliament was recently informed.
The reply also contained a break-up of the capital infused in PSBs by the government, which revealed Punjab National Bank had received Rs 24,342 crore through capital infusion.
PNB witnessed a sharp erosion in capital on the back of the fraud perpetrated by jeweller Nirav Modi and associates who are understood to have acquired fraudulent letters of undertaking from bankers against buyers’ credit from abroad. In the mean time, these transactions were not logged into the core banking system to avoid detection.