Government approves Punjab and Sind Banks capital restructuringAugust 8th, 2008 - 4:54 pm ICT by ANI
New Delhi, August 8 (ANI): The Punjab and Sind Bank can now go for an Initial Public Offer at a reasonable premium for raising additional capital from the market.
The Union Cabinet today gave its approval for re-structuring the equity capital of the Punjab and Sind Bank by converting an amount of Rs. 160 crore into Innovative Perpetual Debt Instrument (under Tier-I), Rs. 200 crore into Perpetual Non-cumulative Preference Shares (under Tier II Capital), while retaining Rs. 183.06 crore as the equity capital of the bank.
The annual floating coupon rate on the proposed Perpetual Non-cumulative preference Shares of Rs. 200 crore may be benchmarked to Repo Rate with a spread of 100 basis points with annual rests, which would be re-adjusted annually on the prevailing Repo Rate on the relevant date.
However, keeping in view the weak financial position of the bank and to enable it to strengthen its capital base, Punjab and Sindh Bank may be allowed to pay a coupon benchmarked to Repo Rate (without any spread) for the years 2008-09, 2009-10 and 2010-11 and thereafter, at the Repo Rate with a spread of 100 basis points.
The rate of interest on Innovative perpetual Debt Instrument and Perpetual Cumulative Preference Shares will be decided by the Government in consultation with the bank.
The enhanced capital will enable the bank to expand its business in compliance with Basel-II requirements and, thereby, improve its financial position. (ANI)
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