Punjab National Bank is not in agreement with its subsidiary, PNB Housing Finance, approving the controversial Rs 4,000-crore share sale deal with the Carlyle Group.

The state-run bank has advised its housing arm to reconsider restructuring the deal. In a letter to its subsidiary, Punjab National Bank has suggested for an alternate capital raising plan that is in line with the directive by the markets regulator Securities and Exchange Board of India (Sebi).

PNB Housing Finance, however, has decided to wait for the Securities Appellate Tribunal’s (SAT) order, which is expected on 12 July.

Earlier, Sebi had asked PNB Housing Finance for revaluation of the issue price for the Rs 4,000 crore preference shares and warrants to be issued to the proposed investors at Rs 390 per share.

PNB Housing Finance on Wednesday said it received a letter from its parent on 4 July, following which the board of the company met on July 5 and 6, 2021.

The letter from the bank said "the board of directors of the company should take cognizance of the directive issued by Sebi vide their letter dated June 18, 2021 and reconsider restructuring the contours of the deal/transaction of the capital raising in line with such Sebi directive," PNB Housing said in the filing.

After receiving Punjab National Bank’s letter, the board of the housing finance firm, by a majority resolution passed on 6 July, decided that since the issue relates to interpretation of law and is sub-judice before the Securities Appellate Tribunal, it will await SAT's order on the matter.

PNB Housing Finance had moved the SAT, after receiving the Sebi letter. The matter is scheduled for hearing on Monday, 12 July.

On 22 June, shareholders of PNB Housing voted on a special resolution for a preferential allotment of shares to Carlyle and other investors, including former HDFC Bank managing director Aditya Puri.

Punjab National Bank, which has over 32% as a promoter group and a majority shareholder, can block the special resolution by voting against the preferential allotment of shares to the investors led by the Carlyle Group.

The voting results are yet to be disclosed as SAT has directed PNB Housing to keep the voting numbers in a sealed cover until the tribunal pronounces its final judgment.

SAT has also directed the lender to inform NSDL to withhold the results of the EGM.

If the shareholders approve of the proposal, it would lead to the dilution of Punjab National Bank’s stake in the housing finance subsidiary to below 26%. PNB would lose majority control but continue to function in the capacity of promoter, as a joint control holder with Carlyle group.

After the proposed preference share allotment by PNB Housing Finance, the stake of PNB would fall to 20.3% stake in the housing finance company while Carlyle Group’s stake would climb to above 50%.