Scam-hit PNB to infuse Rs5,473-cr govt funds to boost capital

Scam-hit Punjab National Bank (PNB) will seek shareholders' nod to raise Rs5,473 crore in equity capital that would help the state-run bank offset part of the Rs11,300-crore fraud perpetrated on it by entities belonging to Nirav Modi and his uncle Mehul Choksi.

Undeterred by the Rs11,300-crore scam, Punjab National Bank is going ahead with the planned Rs5,473 crore capital-raising from the government through a preferential issue of shares.

The bank has convened an extraordinary general meeting of shareholders on 16 March to seek approval for preferential issue of 334.9 million shares of Rs2 each at a premium of Rs161.38 per share to the government, to raise around Rs5,473 crore.

The proposed issue price of Rs163.38 per share is substantially higher than the PNB stock's closing price of Rs114.65 on the BSE on Thursday.

The government holds 57.04 per cent stake in PNB, which will go up to 62.25 per cent after the proposed capital infusion. The equity shares that are to be allotted to the government will have a three-year lock-in period from the date of trading approval.

It is likely that the recap amount for PNB, which was pegged at Rs5,473 crore be raised in view of the Rs11,300-crore fresh charge on the bank.

The government had last month announced a Rs88,000 crore additional capital infusion in PSU banks commencing March 2018.

PNB's capital infusion was pegged at Rs5,473 crore, while the highest amount of Rs10,610 crore was allocated to IDBI Bank.

State Bank of India's recap amount was fixed at Rs8,800 crore.

Meanwhile, the Enforcement Directorate is reported to have seized nine luxury cars, including Rolls Royce Ghost, Porsche Panamera, two Mercedes Benz cars, three Honda cars, one Toyota Fortuner and an Innova belonging to Nirav Modi and his companies.

The ED also seized shares and mutual funds worth Rs7.8 crore of Nirav Modi and Rs86.72 crore of the Mehul Choksi group.

PNB also countered Nirav Modi's criticism of the bank's action that PNB has closed all option to recover dues by going public, saying, ''We have followed lawful avenues available to us as per law of the land to recover our dues.''

PNB also said it has enough assets to meet any liability caused by the fraud as is decided by law.

The CBI, meanwhile, widened the probe into the Rs11,400-crore fraud at the lender to include the top brass. The agency on Thursday confirmed that 10 more officials of the public sector lender, including the bank's executive directors, were being questioned, without giving out their names.

However, PNB opted to transfer 1,415 of its employees from its various branches, including  257 sub-staff,  437 clerks and 721 officers since the Nirav Modi scam broke out on 19 February.

CBI late on Tuesday night arrested a general manager or GM rank officer of PNB, Rajesh Jindal, who held the charge of branch head at the PNB Brady House branch, Mumbai, from August 2009 to May 2011, the investigation agency revealed on Wednesday morning.

The employees union has asked the bank management to review the transfer of employees en masse, which would only help cover up the scam perpetrated by Nirav Modi in collusion with a few bank staff.