PNB shareholders approve ESPS scheme; Rs 28 bn capital infusion by govt

Shareholders also voted to clear the issuance of over 310 million shares to the government as part of recapitalisation of PNB by the Union govt

Shareholders of Punjab National Bank (PNB) Tuesday cleared proposal for selling 100 million equity shares to the employees of the bank and Rs 28.16 billion capital infusion by the government.

The shareholders at the annual general meeting of the PNB held here gave permission to offer, issue and allot up to 100 million of equity shares of face value of Rs 2 to employees under Employee Stock Purchase Scheme (ESPS).

The scheme involves issuing 100 million shares to the current employees of PNB, the bank's managing director Sunil Mehta said at the AGM.

The exact contours for the ESPS scheme will be decided by the remuneration committee of the PNB but the shareholder approval paves the way for implementing the ESPS scheme, he said.

The shareholders also voted to clear the issuance of over 310 million shares to the government as part of recapitalisation of PNB by the Union government.

Welcoming the infusion of capital in the bank, PNB non-executive Chairman Sunil Mehta said: "The government's recapitalisation plan for the public sector banks will further strengthen their balance sheets in addition to expected stronger performance in 2018-19".

The bank informed shareholders that PNB has been working steadily to get back into shape after being hit by the Nirav Modi fraud earlier this year.

"The incident at Brady House branch, Mumbai, was an unfortunate, one-off incident caused by few employees in a single branch. As soon as the incident came to light, the Bank acted swiftly, reported the same to the regulatory authorities & law enforcement agencies, apprised fellow bankers of the developments and put in place internal checks and controls to thwart such happenings in future," Mehta said.

The board of PNB assured shareholders that with business back on track, increased recovery of NPA's and provisioning for liability arising out of Nirav Modi fraud done, the bank is back on the path of profitability and this will soon reflect in the balance sheet as well.

Under Mission Parivartan, he said, the bank is transforming itself and implementing change through People, processes and products, which includes tighter audit controls as well as checks and balances in the lending process.