Wednesday, 20 May 2015

PNB raises Rs 1000 cr through sale of bonds



As a step to raise capital to meet the global capital adequacy ratio (CAR) requirement, public sector Punjab National Bank on Tuesday said it has raised Rs. 1000 crore in domestic market via private placement of bonds. 

PNB garnered Rs. 1,000 crore through long-term bonds which have a coupon rate of 8.23 % on February 9, the bank said in a statement.

As per the Basel III norms on CAR, all public-sector banks will need capital infusion of Rs 2,40,000 crores by 2018, the Finance Ministry has said. The Government plans to infuse capital to these banks in stages and has allocated Rs 11,200 crore for this in the current fiscal. Of this, PNB was allocated Rs 870 crore.

Finance Minister Arun Jaitley has stressed the need for capital infusion in his budget speech and said while public ownership will be retained, there will be an expansion of shareholding in a phased manner. Shares of these banks will be sold in a phased manner, he had noted.

What is Basel III?

Basel III (or the Third Basel Accord) is an international, voluntary regulatory standard on banking. Primarily, the accord focuses on regulations related to capital adequacy, market liquidity risk and stress testing. The basic principles were agreed upon by the members of the Basel Committee on Banking Supervision in 2010–11.
 
After the global financial crisis of 2007-08, banks decided to make the capital adequacy ratio stricter and promote better financial compliance as a means to check such crises. Basel III evolved as a mechanism to tighten bank capital requirements by increasing bank liquidity and decreasing bank leverage.

About Punjab National Bank

Punjab National Bank (PNB), one of the largest nationalized banks, was established 120 years ago. The bank has 6081 branches including 5 foreign branches, 6940 ATMs with a customer base 8.9 crore. PNB, has strong fundamentals, good brand image and enjoys trust among customers. The Bank offers wide range of products and services to cater to every kind of need.

The Bank has won many laurels and accolades in recognition of its overall performance. Recently, PNB was awarded the Golden Peacock Innovative Product/Service Award 2014 by Institute of Directors, It also bagged the ‘Global CSR Excellence and Leadership Award’ for ‘Organisations with Best CSR Practices’ and ‘Bank with leading Financial Inclusion Initiatives Award’ by ABP News and “Vigilance Excellence Award” by Institute of Public Enterprises, New Delhi.