Punjab National Bank expected to recast loans

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Punjab National Bank (PNB) is expected to restructure 5-6% of its loan, of Rs. 40,000 crore. Restructuring will be done as per the RBI approved guidelines. Clear information regarding the recast will be announced soon.

PNB’s managing director SS Mallikarjuna Rao said that the bank’s credit growth will increase around 4-5% in this fiscal. In June there were changes in the bank’s credit portfolio, the loans to the MSME was 35%, and it will grow up to 8-10% in FY21

As inexperienced shoots are emerging within the economy, Rao also stated that the compensation moratorium need not be extended beyond August 31. For now, the lender has no plans to approach the government for fresh capital infusion in FY21, Rao stated an alternative, that it wants to test market appetite first and intends to go in for Qualified Institutional Placement (QIP) by end of the third quarter or early fourth quarter. The bank has already obtained shareholders’ approval to raise Rs 7,000 crore. The capital-to-a- risk-weighted-asset ratio of PNB, after amalgamation on April 1, stood at a healthful 12.63% as of June 30, better than the Basel norm requirement.

In an exchange, submitting last month, PNB said it would increase as much as Rs 10,000 crore through a share and bond sale. It deliberate to explore raising budget through a mixture of QIP, FPO, rights difficulty, and issuance of tier-2 bonds. The bank also added that it might seek shareholders’ approval to raise Rs 7,000 crore in equity capital in its next annual general meeting. The government held as much as 85.59% in PNB as of June 30. The credit goes to the regular doses of infusion to reinforce its capital base.

Earlier this month, the Reserve bank of India extended a special window for creditors to recast stressed retail and corporate loans without classifying them as non-performing, supplied that they set apart 10% provisions on such advances.

PNB recorded a net profit of Rs 308 crore within the April-June period, the first quarter after the amalgamation exercise. Before the merger, it had witnessed an income of Rs 1,019 crore within the April-June area of the last fiscal. Its net non-performing asset ratio stood at 5.39% as of June 30 and it much as 80.75% of its bad loans.

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