PNB gets board go-ahead to tap market for raising Rs 10,000 crore

State-owned (PNB) on Thursday said its board has approved a proposal to raise Rs 10,000 crore through a mix of both equity and debt.

Besides, the board has cleared opening balance sheet of the amalgamated bank as on April 1, which is post amalgamation of and into PNB, the bank said in a regulatory filing.

The board has given its nod for “raising of capital through issue of equity shares and Basel III-compliant tier-2 bonds by way of private placement, qualified institutional placement (QIP), further public offer (FPO), rights issue or any other mode or through a combination thereof up to an amount of Rs 10,000 crore”.

The bank will seek shareholders’ nod for raising of equity capital for an amount up to Rs 7,000 crore in the forthcoming annual general meeting.

The Government of India currently holds 85.59 per cent stake in the bank.

The country’s second-largest lender PNB is planning to hit capital markets in the fourth quarter of this financial year to raise funds to help meet growth needs and regulatory requirements.

The bank has a capital adequacy ratio of 14.14 per cent at the end of March 2020.

The board also approved appropriation of accumulated losses of Rs 28,707.92 crore from the share premium account of the amalgamated bank.

PNB amalgamated (OBC) and with itself, effective April 1 this year. With the merger, the bank now has about 11,000 branches, more than 13,000 ATMs, one lakh employees, and a business mix of over Rs 18 lakh crore. Total domestic business of PNB at the end of March 2020 stood Rs 11.81 lakh crore.

Pursuant to the amalgamation of erstwhile OBC and United Bank of India, PNB’s holding has exceeded 10 per cent in 6 companies and 5 ventures capital funds.

The RBI has accorded approval to hold these investments and the directions given by the Reserve Bank of India (RBI) will be implemented within the given timeframe, it said.

“The situation continues to be uncertain and the bank is evaluating the situation on an ongoing basis. The major challenges of the bank would arise from eroding of cash flows and extended working capital cycles. The bank is gearing itself on all the fronts to meet these challenges,” it said.

Despite these events and conditions, it said there would not be any significant impact on the bank’s results in the future and going concerns assumptions as presently made.

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