PNB may raise capital from rights issue in FY15

Punjab National Bank (PNB) may raise capital through a rights issue in fiscal year 2014-15 (FY15) to
enhance its capital base.

"Next year when government gives capital, we may think of rights issue. We are not looking for big capital next fiscal," K R Kamath, chairman and managing director of the state-owned lender, told PTI.

Rights issue is offered to existing shareholders.

Government of India holds a 58.87 per cent stake in the bank while the remaining is with the public. During the ongoing fiscal year (2013-14), the bank received capital infusion of Rs 500 crore from the government.

The infusion of funds was carried out through preferential allotment of shares to the government. The fund support to PNB was part of the Rs 14,000-crore overall capital infusion plan for the public sector banks (PSBs).

Capital infusion by the government has been done with the twin objectives of adequately meeting the credit requirement of the productive sectors as well as to maintain regulatory capital adequacy ratios in PSBs.

The government's fund infusion in PSBs is in addition to their internally generated capital to enable the banks to maintain a comfortable level of Tier-I, or equity, capital.

Finance Minister P Chidambaram had proposed infusion of Rs 11,200 crore in public sector banks to enhance their capital in the next financial year.