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Punjab National Bank's (PNB) Board of Directors on Friday approved capital raising of upto ₹6,000 crore via bonds.
The country's second largest public sector bank would raise this capital through issuance of Basel III additional Tier-1 (AT-1) bonds or Tier-II bonds or a combination of both in one or more tranches, according to a filing made by the bank with the stock exchanges.
PNB has been from time to time raising AT-1 (Basel-III - compliant ) capital bonds.
It maybe recalled that PNB had last year set out to raise capital to the tune of ₹14,000 crore from the market. The ₹14,000 crore comprised Qualified Institutional Placement ( QIP) of ₹7,000 crore; AT-1 capital of ₹3,000 crore and Tier-II capital of 4,000 crore. Of this ₹14,000 crore, PNB has already raised over ₹10,000 crore.
In January this year, PNB had raised AT-1 (Basel III compliant) capital bonds to the tune of ₹495 crore.
PNB had raised from the market aggregate Tier-2 capital of ₹4,000 crore (in July, September and November 2020).
In May this year, PNB had raised ₹1,800 crore via Qualified Institutional Placement (QIP) by selling 53 crore shares on a private placement basis to investors like LIC, BNP Paribas and Societe Generale.
Given that AT-1 bonds carry lot of risk, the capital market regulator SEBI had earlier stipulated that the banks' deemed residual maturity of AT-1 bonds ( Basel III compliant) should be valued as 100-year debt from April 1 this year. However, the regulator had relaxed this norm following opposition from the finance ministry. SEBI has now provided that maturity of AT-1 bonds would be 10 years until March 31,2022. This would be raised to 20 years and 30 years over the subsequent six month period and from April 2023 onwards, the residual maturity of AT-1 bonds will be considered as 100 years from the date of bond issuance.
Meanwhile, in a separate development, PNB said that it has waived all service charges and processing fee on retail products as part of its festival season offering.
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