On March 25, Punjab & Sind Bank will hold a remarkable general meeting to request shareholder consent for the government’s Rs 5,000 crore equity injection in exchange for bonds. In exchange for the capital infusion, the bank will issue over 335 crore shares to the government for Rs 16.41 per share.
The norms for public sector banks
The government has agreed to capital infusion into Public Sector Banks (PSBs) to tune Rs 5,500 crore to improve their capital adequacy. On Tuesday’s regulatory filing of Punjab & Sind Bank, the capital infusion would take the form of the formation, issue, and allotment of equity shares favouring the government on a preferential allotment basis.
“As a result, shareholder approval is sought for the issue of 3,351,614,868 equity shares of Rs 10 each, completely paid for cash at a premium of Rs 6.41 per share… up to the sum of Rs 5,500 crore only, through preferential issue of equity shares in favour of the government,” it said.
The government will subscribe to the real preferential question. The government currently owns 83.06 per cent of the bank, which will grow to 97.07 per cent after the preference shares are released. On March 25, the Extraordinary General Meeting (EGM) will be held via video conferencing. On the BSE, the lender’s stock fell over 1% to close at Rs 18 per share.