PNB may raise capital via bond FPOrights issue in Q3
At the moment, the bank is adequately capitalized with the capital adequacy ratio of 14.04 percent at the end of December 2019. With the successful merger of Oriental Bank of Commerce and the United Bank of India with itself, Punjab National Bank has started focussing on growth and planned a series of capital raising initiatives, including rights issues and FPO, in the third quarter this fiscal.
The government provided ₹16,091 crores to PNB and ₹1,666 crores to the United Bank of India in September for enhancing the capital base of these two lenders. Besides, Punjab National Bank (PNB) raised ₹1,500 crores from Tier II bonds in December.
The bank is looking to raise ₹3,000 crores through additional Tier-I (AT-1) bonds in the next couple of months.
Talking about the merger, the highest priority is to provide uninterrupted customer service to account holders of the merged entity even in these challenging times.
Indian banks are burdened with a bad loan pile of nearly $140 billion and the lion’s share of it rests with the state-owned banks. Meanwhile, loan growth for the banking industry has also plummeted to the low single digits putting a further strain on these lenders.