PNB plans to sell Delhi HQ to raise funds

India’s second largest state-run lender Punjab National Bank (PNB) is planning to sell its headquarters in New Delhi and other real-estate assets in Chennai and Kolkata in a bid to raise funds, a top bank official said on Tuesday. PNB’s head office is currently situated at Bhikaji Cama Place. As per the official, a new office is being constructed at Dwarka in the national capital, which is likely to be completed soon.

It is also planning to sell its properties located at Parliament Street and Rajendra Place in Delhi.
Other properties have been identified in Chennai and Kolkata as well for sale.

PNB is planning to raise Rs 10-billion during the current financial year via sale of its non-core assets. It is waiting for the right price and things are in work-in-progress, the official said.

Besides its plans for selling non-core assets, PNB’s board also approved raising Rs 30 billion at its recently held extra-ordinary general meeting. When asked how the bank would raise that much capital, the official said it would raise it most probably by qualified institutional placement (QIP) or public issue. “Market conditions will tell how we would raise the capital. But most probably it would be either through QIP or public issue.”

A final decision to raise capital would be taken by PNB in November or December. In March, it would finally raise the funds if need arises. As of now, the bank has sufficient funds for this financial year, the official said.

For the second quarter (Jul-Sep), PNB is expecting a marginal credit growth of 1-2 per cent on quarter-on-quarter basis. In the second half, it is expecting a growth of 3-4 per cent, the official said.

“For overall year we are expecting a growth of 6-8 per cent,” the official further said.

Government banks are struggling to boost their credit growth amid economic slowdown, lower demand from small and big companies. There is only a limited scope left with the banks to push demand and that is to cut down interest rates, but at the same time the borrowers also look for rate of return, according to the official.  

PNB has an exposure in nine accounts out of total 12 top-defaulters accounting for a quarter of the gross non-performing assets as identified by Reserve Bank of India for resolution under Insolvency and Bankruptcy Code.

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