Punjab & Sind Bank (PSB) has sought capital support of Rs 990 crore from the Central Government to fund business growth, a top official of the bank has said.

“It will be pure equity. We have made a request to the Government for capital infusion through preferential allotment route. The capital infusion if done will be made at a premium and near market price,” Mr P. K. Anand, Executive Director, PSB, said.

The last time Government infused capital in PSB was in 2005 and the amount pumped in was Rs 500 crore, officials said. Later on, the Government had converted equity capital of Rs 550 crore into preference shares as well as long-term debt.

At present, PSB has a headroom of Rs 1,674 crore for Tier-I capital and Rs 1,171 crore for Tier-II capital.. The bank had in the first quarter this fiscal raised Rs 300 crore through lower Tier-II bonds.

Q1 net down 58%

PSB on Friday reported a 57.7 per cent decline in net profit for the first quarter ended June 30, 2011 at Rs 64.09 crore (Rs 151.53 crore). The financial performance for the quarter under review was weighed down by depreciation in investment in government securities, and also RBI's directive to provide additional provisions for restructured standard assets.

To address the situation of falling net interest margins (NIM) which had come down to 2.30 per cent in end June from a level of 2.77 per cent in end March, PSB on Saturday raised its base rate by 50 basis points to 10.75 per cent. The bank has also raised its benchmark prime lending rate (BPLR) by 50 basis points to 15.25 per cent.

PSB had last increased its base rate and BPLR by 25 basis points each with effect from July 7 this year. This had raised the Base rate to 10.25 per cent and BPLR to 14.75 per cent.

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