New Delhi: State-owned Punjab & Sind Bank has announced plans to raise ₹2,000 crore through Qualified Institutional Placement (QIP) during the current quarter. Managing Director and CEO Swarup Kumar Saha said the bank has already appointed merchant bankers and legal advisers for the process. The government has approved sale of stake in five public sector banks. These Banks will raise funds via QIP.
Impact on Government Holding and Capital Adequacy
Saha stated that the QIP would reduce the government’s stake in the bank by 3-4%, while improving the capital adequacy ratio by the end of March 2025. The Indian government currently holds a 98.25% stake in the bank as of December 2024.
The government has extended the deadline for public sector enterprises and financial institutions to meet the Securities and Exchange Board of India (SEBI) minimum public shareholding (MPS) norm of 25% until August 2026. Out of 12 public sector banks, five, including Punjab & Sind Bank, still have a government holding exceeding 75%.
Capital Raising Plan
The bank’s board has approved a comprehensive capital raising plan of ₹10,000 crore for the current fiscal year, which includes:
- ₹5,000 crore via infrastructure bonds
- ₹2,000 crore through QIP
- ₹3,000 crore from Tier-1 or Tier-2 bonds
Last month, Punjab & Sind Bank raised ₹3,000 crore from its maiden infrastructure bonds to support infrastructure lending.
Strong Financial Performance
Punjab & Sind Bank reported a strong financial performance for the third quarter ending December 2024:
- Net Profit: The bank’s net profit more than doubled to ₹282 crore, compared to ₹114 crore in the same quarter last year.
- Total Income: Total income increased to ₹3,269 crore, up from ₹2,853 crore in the corresponding period a year ago.
Improved Asset Quality
The bank made significant progress in reducing non-performing assets (NPAs):
- Gross NPAs: Declined to 3.83% of gross loans by December 2024, compared to 5.70% a year ago.
- Net NPAs: Reduced to 1.25%, down from 1.80% in the same period of the previous fiscal year.
Looking Ahead
With the proposed QIP and focus on infrastructure lending, Punjab & Sind Bank aims to strengthen its financial position while complying with SEBI’s public shareholding norms. These initiatives are expected to enhance the bank’s capital base, boost investor confidence, and support its growth plans.
