Punjab National Bank (PNB) will invest ₹500 crore in the proposed ₹2,500-crore rights issue of PNB Housing Finance Ltd (PNBHFL), a top official of the bank has said.
The second largest public sector bank, which has a 32 per cent stake in PNBHFL, has obtained Reserve Bank of India (RBI)‘s approval to infuse up to ₹500 crore in theIssue, Atul Kumar Goel, Managing Director & CEO, PNB said on Friday.
“There is no plan to sell our existing holding in PNBHFL. The moment we invest ₹500 crore, the bank’s shareholding in PNBHFL will fall below 30 per cent. That is the regulatory requirement. But our shareholding will remain above 26 per cent, so that we can continue to be categorised as a promoter,” Goel said.
He was hopeful the rights Issue process will be completed by December-end.“ If not, it should be completed by the next quarter (January-March 2023), he said.
PNBHFL’s board had approved capital raising of up to ₹2,500 crore via rights issue in March this year. The detailed terms of the rights issue, including the issue price, rights entitlement ratio, record date and timing, are yet to be finalised.
PNBHFL was compelled to call off its ₹4,000-crore capital-raise plan involving Carlyle Group and other marquee investors in October last year. The preferential issue to private equity major Carlyle and other investors had hit a regulatory hurdle on pricing.
PNB CAPITAL RAISING
Goel said PNB had raised ₹2,000 crore via AT-1 bonds at 8.75 per cent in the first week of July 2022. The proceeds were used to repay capital of ₹1,500 crore raised earlier.
“We are waiting and watching. If the rates are conducive and we are in a position to raise at lesser than 8.75 per cent, we will not mind hitting the market. As on date there is no immediate need.The objective is to reduce cost of capital,” Goel said.
The PNB board has already approved capital raising of ₹12,000 crore. Of this, ₹5,500 crore is for AT1 and the remaining ₹6,500 crore for Tier-2 capital.
Goel said the bank had a comfortable capital adequacy of 14.80 per cent, as against a regulatory requirement of 11.5 per cent.
Meanwhile, on the digital banking units announced in this year’s budget, Goel said the bank had been allocated eight of the 75 branches planned, and all the eight would become operational from July 31.