Punjab National Bank plans institutional share sale within 6 months

Punjab National Bank, the country’s leading state-run lender, aims to conclude a planned share sale to institutional investors within the next six months, Chief Executive Officer said on Friday, as the bank endeavours to fortify its capital base.

With the demand for loans on the rise, banks in India are actively enhancing their capital reserves. Notably, the country's largest lender, State Bank of India (SBI.NS), has also signalled its openness to raise equity capital.

In December, Punjab National Bank's board approved a fund raise of Rs 7,500 crore through equity capital.

A qualified institutional placement (QIP) entails selling shares to institutional buyers without offering them to the general public.

"Attempting to secure all requisite approvals for the QIP, we aim to raise the capital from the market within six months," stated Atul Kumar Goel, Managing Director and Chief Executive Officer of PNB, in an interview.

Looking ahead to the financial year 2025, Punjab National Bank envisions a loan growth of 11-12 per cent, according to the CEO, building on an 11.2 per cent year-on-year increase witnessed in January-March.

The bank sets its sights on deposit growth ranging from 9 per cent to 10 per cent for the fiscal year, compared to a nearly 7 per cent growth observed in January-March.

Goel disclosed that the bank's corporate loan pipeline stands at approximately Rs 1 lakh crore, out of which roughly Rs 60,000 crore to Rs 70,000 crore have been sanctioned.

Punjab National Bank, reporting a more than doubled net profit in January-March amid a decline in loan-loss provisions, aims to enhance its asset quality in 2024-25, targeting bad loan recoveries of around Rs 18,00 crore, as per Goel.

The CEO outlined plans to reduce the gross and net non-performing asset ratios to below 5 per cent and 0.5 per cent, respectively, by March 2025, from 5.73 per cent and 0.73 per cent at March-end.

The bank has set an ambitious target to add 150 branches during the current fiscal year.

Regarding infrastructure project loans, Goel mentioned that banks would imminently share their feedback on a central bank proposal for tightening regulations. He affirmed that if implemented as proposed, the guidelines would not impede project financing, and the bank would be well-positioned to comply.

(With Reuters inputs)