Punjab National Bank (PNB) will seek shareholder nod for raising equity capital of up to ₹3,000 crore to fund business growth.
The public sector lender has convened an extraordinary general meeting (EGM) on September 12 for this purpose, sources close to the development said. The Centre currently holds 65.01 per cent stake in PNB.
The resolution empowering the board of directors to decide on the appropriate route — FPO/ rights issue/ ESOP — for capital mop-up also comes with the condition that the Centre’s shareholding in the bank should not fall below 52 per cent.
Shareholders’ nod is also being sought to empower the board to undertake qualified institutional placement (QIP) with qualified institutional buyers.
It may be recalled that Sunil Mehta, Managing Director and CEO, PNB, had earlier this month said that the bank intended to raise ₹6,000-crore capital this fiscal.
While ₹3,000 crore will be pure equity capital, the remaining ₹3,000 crore is expected to be raised in the form of additional tier-I bonds, which also qualify as capital, Mehta had said.
PNB’s board had on August 2 given its approval for raising equity capital of ₹3,000 crore through follow-on public offering/ rights issue/ qualified institutional placement/ ESPS/ ESOP route.
Of the planned ₹3,000 crore of additional tier-1 capital, PNB has already raised ₹1,500 crore through issue of bonds at a low rate of about 9 per cent.
Besides the capital mop-up of ₹6,000 crore, PNB will also look to raise ₹1,000 crore from the sale of non-core assets, including stakes in some subsidiaries, this fiscal.
Currently, the bank is capitalised at ₹425.59 crore and its capital adequacy, as on March 31, 2017, stood at 11.66 per cent.
PNB had reported a 12 per cent increase in net profit for the first quarter ended June 30, at ₹343.40 crore (₹306.36 crore). This bottomline performance was higher than the March 2017 quarter net profit of ₹261.90 crore.