PNB May Get Rs 13,000 Crore From Asset Sale, Equity Infusion

Punjab National Bank is expected to receive Rs 13,000 crore from the sale of non-core assets, divestment of stake in subsidiaries and second-tranche of capital infusion in the three months through September, a senior government official told reporters.

This comes after the country's second-largest state-owned lender reported its biggest-ever quarterly loss in Indian banking history, pulling down its capital ratios below the regulatory minimum. Net loss stood at Rs 13,417 crore in the fourth quarter of 2017-18, a fallout of the Rs 14,000-crore fraud involving jewellers Nirav Modi, Mehul Choksi, and their firms and the Reserve Bank of India's new stressed asset framework.

The state-owned lender will sell its property at Bhikaji Cama Place in Delhi as well as a part of its stake in PNB Housing Finance, the official said. Besides, recovery of dues from companies undergoing insolvency proceedings and second tranche of infusion under government's recapitalisation plan will also boost the bank's capital, the official added.

In 2017-18, the government injected Rs 5,473 crore into PNB—the second-highest infusion among lenders that are not under RBI's prompt corrective action. The framework reins in lenders whose operational and financial metrics are looking weak.

Currently, the government does not see any trigger for PNB to be included in the PCA framework, the official quoted above said.

Nine of the 11 lenders under the PCA framework have submitted their revival plans to the government. That includes measures such as reducing risk-weighted assets and sale of non-core assets.

Another government official said six lenders under the PCA framework have sought additional capital from the government. The government may provide PCA banks more capital than the Rs 52,311 crore infused last year but is not keen on changing the infusion plan decided last year, the official said.

The government, in October last year, had decided to infuse Rs 2.11 lakh crore in all public sector banks over a period of two years. Of this, about Rs 1.35 lakh crore would be infused by issuing recapitalisation bonds, while the rest would come from budgetary resources and raising capital from the market, the government had said.