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PNB Housing Finance, a subsidiary of Rs 11,400 crore scam-hit Punjab National Bank, plans to raise $400 million (about Rs 25.60 billion) through masala bonds to fund building of affordable homes.
Of the $400 million, World Bank's arm IFC has agreed to underwrite $150 million from its own funds while the balance would be raised through other investors, market sources said.
The money will be raised via PNB Housing's masala bonds - rupee-denominated bonds issued in overseas capital markets, sources added.
Masala bonds are instruments through which Indian entities can raise funds by accessing overseas capital markets, while the bond investors hold the currency risk.
Although PNB has sizeable stake in PNB Housing, sources said, both operate as separate entities.
PNB Housing Finance is a subsidiary of PNB, whose stake holding in the company is 32.96 per cent.
Of this nearly 33 per cent stake, 20 per cent is locked up till November 7, 2019 as per the Listing Obligations and Disclosure Requirements of Sebi, PNB Housing said in a statement filed with stock exchanges.
With regard to asset quality, PNB Housing's gross NPAs were 0.42 per cent, whereas net NPAs were 0.33 per cent of loan assets as on December 31, 2017.