PNB to raise Rs 1,250 crore by issue of preference shares to government

State-owned Punjab National Bank (PNB) today approved a fund infusion of Rs 1,250 crore through preferential issue of shares to the government.

PNB has approved issuance of shares of face value of Rs 10 each for raising up to Rs 1,250 crore on preferential basis in favour of Government of India, PNB said in a filing to the BSE.

The proposed preferential allotment will be subject to necessary approvals and the price for issue would be decided by as per the rules of market regulator Sebi.

The bank will hold an extraordinary general meeting of shareholders on March 4 to take up approval for the same. Last year, PNB got capital infusion of Rs 1,285 crore from the government.

Earlier this month, the government approved infusion of Rs 12,517 crore in around 10 state-owned banks over the next three months.

"Pursuant to the Budget announcement made by the Finance Minister on March 16, 2012, we are infusing additional capital into the public sector banks. We will infuse before the end of this fiscal year a sum of Rs 12,517 crore," Finance Minister P. Chidambaram had said.

"We think about 9-10 banks will get the money, this will enable the banks to maintain the tier I CRAR (capital to risk-weighted assets ratio) at a comfortable level and will be compliant to stricter capital adequacy norms of Basel III whenever Basel III is implemented," he had said.

The government infused about Rs 20,117 crore in public sector banks during 2010-11, and Rs 12,000 crore in 2011-12.