Indian two thousand and five hundred rupee banknotes are arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

PNB, Union Bank Raise Rs 7,000 Crore Via QIP

Public sector lenders Punjab National Bank and Union Bank of India have cumulatively raised Rs 7,000 crore through a qualified institutional placement. The amount raised will augment the capital adequacy and help in business expansion of the banks.

PNB has raised about Rs 5,000 crore by selling 29.76 crore shares at Rs 168 per scrip, which is at a discount of 4.735 per cent to the floor price of Rs 176.35.

In a statement, Union Bank of India said the offer of QIP was oversubscribed and the bank has issued 12.93 crore shares aggregating to Rs 2,000 crore. The investors include asset management companies, insurance companies and foreign institutional investors, it said.

According to PNB, the Committee of Directors for Capital Raising of the bank decided to close the issue and accorded its consent for the issue of shares to investors.

The board in September had given approval for mobilisation of Rs 5,000 crore through various instruments, including rights issue and private placement, during financial year 2017-18.

Also Read: PNB To Raise Rs 5,000 Crore; Appoints Merchant Bankers

Other state-owned lenders like Bank of Baroda, Bank of India, Allahabad Bank and Andhra Bank have also lined up share sale offers.

Finance Minister Arun Jaitley in October had announced an unprecedented Rs 2.11 lakh crore two-year roadmap to strengthen public sector banks, reeling under high non-performing assets or bad loans. Their bad loans have increased to Rs 7.33 lakh crore as of June 2017, from Rs 2.75 lakh crore in March 2015.

The plan includes floating re-capitalisation bonds of Rs 1.35 lakh crore and raising Rs 58,000 crore from the market by diluting the government's stake.

The government equity, as per the current policy, can come down to 52 percent in state-owned banks. Jaitley had also announced that banks would get about Rs 18,000 crore under the Indradhanush plan over the next two years.

Also Read: HDFC Bank Mulls Raising Funds Through Institutional Share Sale

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