INSUBCONTINENT EXCLUSIVE:
MUMBAI: Punjab National Bank which has been staring at a default on interest payments, has received conditional approval from the Reserve
Bank of India to pay interest on its perpetual bonds that are due next week, said two senior officials aware about the development.
The
beleaguered bank will have to raise Rs 135 crore in equity, the amount it has to pay as interest on those bonds, from either the market or
from the government through sale of shares to pay the bond holders, said those people who did not want to be identified.
This special
duped it of nearly Rs 14,000 crore
It reported record loss last year and its capital breached the regulatory minimum.
The bank is in the process of selling non-core assets and
the government would invest Rs 2,000 crore to boost its equity
Its capital adequacy ratio fell to 5.95 per cent instead of the regulatory minimum of 7.375 per cent percent to keep paying interest on
debt capital instruments, says Anil Gupta, vice president, financial services at rating company, Icra.
The bank had raised additional tier I
capital of Rs 1,500 crore at a coupon of 8.98 per cent
In a filing to the stock exchange on July 7, the bank has said that it would pay interest on the bonds subject to regulatory approvals.
