PNB not to take part in PNB Housing Finance’s planned fund-raise

Our Bureau New Delhi | Updated on February 22, 2021

But housing finance arm to go ahead with capital raising plans

Punjab National Bank (PNB) will not be participating in the capital-raise plans of its associate company PNB Housing Finance Limited (PNBHFL). However, despite the promoter PNB not participating, PNBHFL intends to continue to pursue with its proposed plan to raise ₹1,000 crore capital.

This decision by PNB is being seen in banking circles as a consequence of RBI not giving the go ahead to the bank’s application to infuse equity in PNBHFL.

“Punjab National Bank has communicated that it will not be participating in the capital-raise plans of the company. However, the company will continue to pursue with the proposed capital-raising plan through permitted modes,” PNBHFL said in a regulatory filing with the bourses.

PNBHFL has now said that it would look to raise capital of up to ₹1,000 crore through permitted modes including qualified institutional placement (QIP).

It maybe recalled that the Board of PNBHFL had, on August 19 last year, given the nod to the company to explore the possibility of raising capital (about ₹1,800 crore) through rights or preferential issue. Before that, PNB had approached the RBI for permission to infuse equity into the company.

In order to maintain optionality and timely injection of capital, the PNBHFL Board had last month (January 2021) approved the addition of the QIP mode in the capital-raise plan, in addition to rights and preferential issue. This was subject to PNB’s holding remaining above 27 per cent, with 26 per cent being minimum. PNB held 32.7 per cent stake in PNBHFL as on December 31, 2020.

As of end December 2020, PNBHFL’s capital to risk asset ratio (CRAR) based on IndAS stood at 20.06 per cent, of which Tier I capital was 17.42 per cent and Tier II capital was 2.64 per cent.

Earlier this month, PNB Managing Director and CEO Ch SS Mallikarjuna Rao had expressed confidence over getting RBI nod for infusing capital in its housing finance arm.

PNBHFL Managing Director & CEO Hardayal Prasad had, in an analyst call in January 2021, too expressed “hope” and “confidence” that PNB will get approval from the RBI for capital infusion.

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Published on February 22, 2021
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