The government proposes to restructure the equity of New Delhi-based Punjab and Sind bank for enabling it to access the capital market for raising funds. | |
| According to the bank officials, the government's move follows the bank's proposal to reduce the equity base which currently stands at Rs 743 crore. |
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| The bank has proposed to reduce the equity base to Rs 243 crore by converting the remaining equity of Rs 500 crore into preference shares. This will help the bank to launch a public issue and serve the shareholders better, since the equity base will be small. |
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| According to officials, the bank is planning to access the capital market with an initial public offer in this financial year. However they maintained that if the market conditions were not favourable, they might defer the plan to the next year. Meanwhile the bank has taken steps to bring down the non performing assets (NPAs). |
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| It had gross NPAs of 17 per cent two years back and it proposes to bring these down to below 3 per cent in 2006-07. The net NPAs, which were more than 9 per cent two years back, would decline to less than a per cent during this financial year. The bank posted a profit of Rs 108 crore in 2005-06, as against a loss of Rs 71 crore in 2004-05. |
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| In 2005, the government had provided an equity assistance of Rs 500 crore to the bank. It had approached the Reserve Bank of India (RBI) for regulatory forbearance, wherein it had sought a time-frame of eight to ten years to meet the provision for staff pension amounting to around Rs 400 crore. |
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| In its corporate mission statement, the bank has committed to adopt high-level technology and achieve the highest standards of transparency and accountability in the conduct of banking business. |
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| It also intends to maximise competitive risk-adjusted return on capital through a planned reduction in the average cost of funds, increased yield on advances and investments besides a reduction in the cost of operations. |
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