Govt to pump Rs 113 bn into 5 PSBs to meet regulatory capital requirements

The government has decided to infuse Rs 113 billion into  five public sector banks, including Punjab National Bank, to help them meet regulatory capital requirements, sources said.

The capital infusion will be a part of the Rs 2.11-trillion recapitalisation plan for public sector banks announced by the government last year. It is a result of the banks’ inability to fund the interest payment to bond holders of Additional Tier 1 (AT-1) bonds, according to sources.

AT-1 bonds are perpetual in nature and therefore provide higher interest rates to investors. A high-level of bad loans and widening losses have made it