PNB to transfer Rs 8,000 crore loans to bad bank

State-run lender will transfer bad loans of Rs 8,000 crore to the proposed bad bank, said its chief SS Mallikarjuna Rao. The lender on Friday declared a standalone net profit of Rs 586.33 crore for the quarter ended March 31, 2020.

National Asset Reconstruction Company or NARCL is expected to be operational by next month. “In the first tranche roughly Rs 8,000 crore of assets is identified by PNB,” said Rao, adding that bank will take equity participation in the bad bank but it will be less than 10%.

“We are expecting that by June 30, everything will be put in place,” he said.

PNB is further looking to monetise its non-core assets and will exit out of Canara HSBC OBC Life Insurance where it holds 23% stake. “The process may take anything from 12 to 18 months,” said Rao adding that the time horizon will depend on time taken to complete the formalities which include selecting a merchant banker, actuary, legal counsel, and go through the process.

“PNB may also monetise its non-core assets and will exit out of Canara HSBC OBC Life Insurance where it holds 23% stake”

— Other Plan

“Since it is not a listed company the valuations has to be finalised,” he said adding the bank will also exit out of Asset Reconstruction Company of India Ltd. (ARCIL) and some other smaller investments in stock holding corp.

The lender expects a near three-fold jump in its net profit to Rs 6,000 crore during the current fiscal as consolidation process is over.

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“Our projection for FY22…our estimate could be overall net profit should not be less than Rs 6,000 crore at the conservative level. It all depends on credit growth demand in the economy,” he said adding accurate estimation could be done after the end of first quarter.

On Credit growth, Rao said, it should between 8-10% for the banking industry on the assumption that economy grows at 9.5% in 2021-22.

PNB is not looking to raise any further capital as it is sufficiently capitalised, said Rao adding that although there is a window to raise through issuance of AT1 Bonds. In its housing finance venture,

, the bank will not make any investments, said Rao.



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