PNB looking to raise Rs 1,800 cr via QIP

Kolkata: Punjab National Bank (PNB) is looking to raise up to Rs 1,800 crore by selling shares to institutional investors, about 44% its targeted fund raising announced earlier.

The state-owned lender has set the floor price for the sale at Rs 35.51 per equity share.

Banks are looking to shore up their capital to absorb the fresh slippages amid the raging second wave of the coronavirus pandemic. Reserve Bank of India (RBI) Governor Shaktikanta Das has several times highlighted the need to create capital buffers to cover the risks during extreme stress.

The PNB board approved the floor price and the launch of the issue at its meeting Monday. Its capital raising committee will meet again on May 14 to consider and determine the issue price, including up to 5% discount on the floor price, the bank said in a regulatory filing.

PNB shares closed Monday 1.66% lower at Rs 35.60 on BSE while the Sensex rose 0.6% up to 49,502.41 points.

PNB's Rs 1800 crore issue includes an option to retain oversubscription up to Rs 600 crore, a senior bank executive said.

PNB had raised Rs 3,788 crore in QIP in December last year, about 46% short of the Rs 7,000-crore target. Later, it had said that it would look to raise the balance Rs 3,200 crore early this year.

Public sector banks would need to raise around Rs 43,000 crore of fresh equity this fiscal, according to an estimate by ICRA Ratings. The government would infuse Rs 20,000 crore and the balance needs to be mobilized from the market.

These banks raised Rs 12,000 crore through share sales in FY21 while their private peers raised Rs 53,600 crore.

Bank of Maharashtra and Indian Bank are among the public sector lenders that will seek to raise capital later in the year.