RBI allows Punjab National Bank to invest Rs 500 crore in Rs 2,500-crore rights issue of Punjab Housing Finance; stake of bank in arm to fall below 30% but not less than 26%.
The Reserve Bank of India (RBI) has allowed Punjab National Bank (PNB) to invest Rs 500 crore in the upcoming Rs 2,500 crore rights issue of Punjab Housing Finance.
"Post rights issue, the holding of the bank would come down below 30% but would be higher than 26% so that the bank retains promoter status," PNB managing director and CEO Atul Goel said. The state-owned bank currently holds a 32% stake in the housing finance firm.
Goel also said that the bank has no plans to sell its stake in the housing finance subsidiary.
PNB, however, will not be subscribing to the rights issue proportionate to its current holding in the company, with the Reserve Bank of India (RBI) giving the bank permission only to invest up to Rs 500 crore in the rights issue. Consequently, the lender's stake in the mortgage firm will come down below 30% from the current level.
“We are expecting the rights issue to conclude by December or latest in the March quarter,” Goel said.
The housing finance company was looking to raise equity capital worth Rs 4,000 crore and had entered into a deal with joint venture partner Carlyle Group, among other investors, in May last year.
However, in October 2021, the mortgage lender decided to terminate the Rs 4,000 crore stake sale citing delays due to pending legal proceedings. Shareholders had also opposed the deal with Carlyle.
