Public sector banks have been the hot shot of the hour.
Not only have they been on the news for their privatisation theories but there has also been going on a lot of changes and developments in the routine of a normal working PSB.
It has now been reported that about 5 main public sector banks, including SBI and PNB will be looking forward to sell their shares to institutional investors like capital banks, in an attempt to support their capital base, which has been tormented by the Covid-19 pandemic.
What is this About?
As mentioned, coronavirus hampered the economy pretty badly, which has a direct effect on the banking sector.
In order to bolster their capital base, 4 of the 5 public sector banks:
- State Bank of India (SBI)
- Punjab National Bank (PNB)
- Bank of Baroda (BoB)
- Union Bank of India
Are looking forward to conduct their raising by the end of Q3 or the start of Q4 of fiscal 20.
These banks will conduct this process through the Qualified Institutional Placement (QIP) procedure. However, they will comment on any such proceedings only after their Q2 results.
This is because post the Q2 results, banks will get a better sense of their NPAs and one-time loan restructuring, amidst other details, by the end of October.
Only after this will the banks be able to decide all the concession formalities with merchant bankers.
Details on Banks
Unlike public sector banks, some private banks like ICICI Bank, Axis Bank and Kotak Mahindra Bank have already gone through mobilising their capitals, three months back, through the QIP procedure.
PNB has filled us in that it will hit the capital market in the 4th quarter, only after it’d have its two quarterly balance sheets in hand and already scanned.
- SBI’s shareholders have approved to raise ?20,000 crore, through public issue or private placement of shares.
- Similarly, PNB’s shareholders have approved raising ?7,000 crore through this route.
- BoB have approval of raising ?9,000 crore from its shareholders, while
- Union Bank of India have approvals worth ?6,800 crore by its shareholders.