NEW DELHI: The Punjab National Bank (PNB) has halved its estimation of accounts that may go for one-time loan restructuring, approved by the Reserve Bank in August for dealing with Covid 19-related stress, to Rs 20,000 crore owing to lackluster response to the scheme. The lender now expects less than 3% of its loan book to be under the debt recast window.
“In August, we had estimated it (restructuring) to be Rs 40,000 crore. Surprisingly, however, not many people have requested loan restructuring. People have started paying the money,” PNB Managing Director S S Mallikarjuna Rao said in a virtual interaction with the media on Tuesday.
“In the retail and MSME segment, we have undertaken restructuring to the extent of Rs 41 crore till September. Then, we have also received an application for another Rs 32 crore, which we have restructured by October 31. In terms of corporate loans, we have 15 received applications amounting Rs 2,022 crore,” he added.
Rao expects advances worth Rs 20,000 crore to go for restructuring by December 31, 2020, with the MSME profile restructuring to be in the range of Rs 4,000-5,000 crore.
The tepid requests for restructuring, particularly, from the corporate world could be because they fear that their ratings may come under pressure for a period of two years if they opt for the scheme. “...as a result, the majority of them are paying back the money by deleveraging and looking for the economy to come back more effectively,” Rao noted.
Fundraise
The country’s second-largest public sector bank plans to raise Rs 7,000 crore through qualified institutional placement (QIP) of shares by December next month. PNB has already taken approval from the board for raising Rs 14,000 crore by way of Tier II, Additional Tier 1 (AT-1) bonds, and QIP (Qualified Institutional Placement), the PNB chief said.
"Of this, Rs 4,000 crore is for Tier II. Against this, we have raised Rs 2,500 crore and the remaining Rs 1,500 crore and additional Rs 3,000 crore from AT-1 bonds will be raised before November 30. With respect to QIP of Rs 7,000 crore, we are planning to go to the market in the second or third week of December. It would depend on the book running lead manager (BRLM) and roadshows," Rao added.
On unlocking value in subsidiaries, Rao said that there are no such plans now. “We are adequately capitalised and after going to the market we expect capital adequacy ratio to cross 14%,” he added. PNB’s capital adequacy ratio rose to 12.84% in the quarter ended September, higher than the regulatory requirement of 11.5%.
In terms of non-core assets, the bank is looking to raise Rs 500 crore from the sale of real estate during the current fiscal. Rao said the bank has decided to infuse Rs 600 crore in its mortgage arm PNB Housing Finance through preferential issue or rights issue subject to Reserve Bank of India (RBI) approval.
On credit growth, the bank expects the credit growth to pick up slightly in the second half but it would be less than 5% for the entire fiscal.
Responding to questions on the recovery front, Rao said PNB is expecting about Rs 16,000 crore this fiscal keeping in view the impact of the pandemic-led disruptions.
In the first half ended September, he added, that the bank has done cash recovery of Rs 3,200 crore, and another Rs 5,000 crore is to be made by March 2021. That apart, about Rs 8,000 crore may come from the resolution cases before the National Company Law Tribunal.