Punjab National Bank (PNB), the country’s second-largest public sector bank, has decided to invest up to ₹500 crore in the proposed rights issue of its associate mortgage lender PNB Housing Finance Ltd (PNBHFL).
The Board of PNB —post the Reserve Bank of India (RBI) approval—has approved the bank’s participation in PNBHFL’s rights Issue to retain bank’s shareholding at 30 per cent or below, but above 26 per cent. This is also being done to retain PNB’s status as promoter, according to a filing with the stock exchanges.
It maybe recalled that the PNBHFL had in March 2022 finalised a rights Issue to mop up ₹2,500 crore.
This announcement came nearly a year after its scrapping of ₹4,000 crore fund raising plan involving preferential allotment of shares, largely to private equity major Carlyle Group.
The ₹4,000 crore preferential issue to Carlyle Group and other investors had hit a regulatory hurdle last year due to pricing of the issue. Market regulator SEBI had questioned the deal after it was alleged that PNBHFL was giving preferential allotment to Carlyle Group and other investors at a lower value than the prevailing market price. Post the PNBHFL-Carlyle deal fiasco, SEBI had brought in changes to the pricing formula for allotment of shares under preferential issues.
Punjab National Bank currently holds about 32.6 per cent stake in PNBHFL. The RBI had in early 2021 rejected PNB’s request for approval to subscribe to the rights issue of PNBHFL as the central bank then wanted PNB capital to remain well above the regulatory norm.
As of end March 2022, PNB’s capital adequacy ratio stood at 14.5 per cent as compared to 14.32 per cent as of end March last year.