PNB may not get fresh capital infusion from government

The government will not infuse additional capital into fraud-hit Punjab National Bank (PNB), a report in Mint has claimed.

The second-largest government-owned lender would have to rely on recoveries of dues under the Insolvency and Bankruptcy Code (IBC) and proceeds from sale of its non-core assets, the report has suggested citing a senior government official.

Moneycontrol could not independently verify the report.

“We have told PNB that they should focus on selling their non-core assets and recoveries from IBC. We will not provide them any additional capital to tide over the provisioning from the fraud. They will get only what has been budgeted,” a senior official cited earlier, told the newspaper.

PNB is expected to recover dues from Bhushan Power and Steel. The resolution proposal is being heard by the National Company Law Tribunal (NCLT). Bhushan Power and Steel owes more than Rs 48,500 crore to a PNB-led consortium of lenders, the report said.

The public sector bank is reportedly mulling the sale or leasing real estate properties across northern India, including New Delhi.

It is also exploring the possibility of selling a part of its stake in life insurance joint venture — PNB Metlife. PNB currently has a 30 percent stake in the joint venture.

PNB had earlier this month reported a record net quarterly loss of Rs 13,417 crore for the March-ending quarter.

Total hit to PNB on account of the Nirav Modi-scam is Rs 14,356.84 crore. This includes unauthorised letters of undertaking and domestic loan.

Gross non-performing assets (NPAs) worsened substantially to 18.38 percent of total loans as of March-end 2018 compared to 12.11 percent of total loans in December 2017 and 12.5 percent as of March-end 2017.

PNB also reported divergences in classification of NPAs in comparison to RBI's assessment. For FY17, gross NPA divergence stood at Rs 2,207 crore, and net NPA divergence came in at Rs 1,414.9 crore.