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Last Update: Mon, May 21, 2012 7:36 AM IST (2:06 AM GMT)
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New Delhi: Indian state-run lender Punjab & Sind Bank has said it will sell up to 5% of its equity shares to the country's largest life insurer Life Insurance Corp of India (LIC) on a preferential basis, a move that is expected to help the bank bolster its tier I capital.
"The additional capital will further strengthen capital to risk-weighted assets ratio (CRAR) of the bank and support its business growth," Punjab & Sind Bank said in a statement earlier Thursday.
The bank proposes to allot over 11.29 million equity shares to LIC, at a price to be decided in terms of Securities and Exchange Board of India (SEBI) regulations, the statement said.
Rough calculation shows that as per Punjab & Sind's closing share price at Rs 85.75 on Thursday, 11.29 million equity shares may aggregate about Rs 950 million.
The proposal is subject to approval from the government and other regulatory compliances, it added.
Currently, the Indian government holds 82.07% in Punjab & Sind Bank.
The state-run lender will also seek its shareholders' approval for the stake divestment in due course, it said.
Capital adequacy ratio -- the amount of capital in proportion to a lender's advances -- of the bank was at 12.99% at the end of the December quarter lower than 14.13% recorded in the same period last year.
The government is expected to infuse a total of Rs 150-160 billion into select state-run banks in the current financial year 2011-12 to shore up their tier-I capital adequacy ratio to 8%.
Recently, India's largest lender State Bank of India (SBI) announced that the government will infuse about Rs 79 billion into the bank via a similar route.
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Punjab & Sind Bank is an India-based company. The company was established in 1908. It is a financial company providing banking services. The company's services include - savings deposits, recurri ...
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Life Insurance Corporation of India (LIC) is an India-based company. The company was established in 1956. It is a state-owned insurance company. The company funds around 24.6% of Indian governmen ...
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