PNB plans to sells its Entire Stake in ISARC for Rs.34 Crore

Hellobanker Team

4 weeks ago

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Punjab National Bank (PNB) – one of the largest public sector banks in India, has taken a big step to simplify its investments. On Tuesday (May 13, 2025), the bank announced that it has signed an agreement to sell all the shares it owns in a company called India SME Asset Reconstruction Company Ltd (ISARC). The total value of the deal is ₹34.04 crore.

In a document shared with the stock exchange, PNB said that it officially agreed to sell its entire holding in ISARC on May 13, 2025. This means PNB will no longer be part of that company.

Details of the Sale:

PNB is selling 2.09 crore shares of ISARC.
Each share is being sold for ₹16.29.
The sale is expected to be completed by the end of June 2025 (the first quarter of the financial year 2025–26).

This decision is part of PNB’s plan to focus more on its main business of banking and slowly move away from businesses that are not directly related to banking.

Earlier in March 2025, the Reserve Bank of India (RBI) approved a new company, Authum Investment and Infrastructure Limited, to take over as the main supporter (or sponsor) of ISARC. RBI also approved that this company can add more money (equity) into ISARC. Now, this company will buy the shares that PNB is selling.

What ISARC Does?

ISARC is a special financial company that helps revive small and medium businesses (called SMEs) that are struggling with bad loans or financial problems. ISARC is the country’s first ARC supported by a large number of public sector banks and undertakings. It will strive for speedier resolution of NPAs with a focus on MSME sector. It was started by a group of financial institutions including:

SIDBI (Small Industries Development Bank of India)
Bank of Baroda
PNB
SIDBI Venture Capital Ltd

Asset Reconstruction Companies (ARCs) were created under the SARFAESI Act, 2002 to help deal with bad loans, also known as Non-Performing Assets (NPAs). These companies specialize in taking over bad loans from banks and financial institutions, managing them, and trying to recover the money.

By selling these bad loans to ARCs, banks can remove them from their books. This helps banks reduce their stress and allows them to focus more on their main job—giving loans, supporting new businesses, and helping the economy grow.

ARCs aim to recover as much money as possible from these bad loans using efficient and innovative methods, while keeping costs low. Their work helps clean up the financial system and supports overall economic health.

ISARC’s financial performance in the last financial year (FY24) was:

Capital: ₹129.68 crore
Total assets: ₹130.11 crore
Income: ₹18.08 crore
Profit before tax: ₹10.65 crore
Profit after tax: ₹9.37 crore

Additional Information:

PNB also made it clear that this deal is:

Not a related-party transaction (meaning the buyer is not closely connected to PNB).
Not a merger or slump sale (which is a type of business sale involving the transfer of an entire unit or business).