PNB needs to sell assets to meet funding needs: Govt

NEW DELHI: The government has ruled out additional equity beyond the Rs 5,500-odd crore provided to PNB to foot the bill of the fraud and wants the country’s second-largest public sector player to sell non-core assets to raise resources.


“We provided them equity to meet their lending requirements. If a part of it is wiped out due to provisions for fraud, the bank has to sell non-core assets and raise money,” said a senior government official. The bank has exited the mutual fund business and was looking at the possibility of selling its earlier headquarters in south Delhi to mop up funds. Sources said the bank can look at its shares in PNB Gilts, the primary dealership arm, or

PNB Housing Finance

, where the bank is already scouting for investors.

In a communication to employees, the PNB management has said that the state-run players enjoy “strong sovereign backing”, which was visible in the high capital infusion. While maintaining that it was adequately capitalised, the government-owned bank in the midst of a fraud, said it has a strong non-core asset base and was ready to sell both financial and non-financial assets to further strengthen its capital base. “The liquidation will be done as per the opportune market and time, for which the bank is consistently focused,” the communication said.

The PNB management described the fraud as a case of operational risk due to delinquent behaviour of one or more employees and reiterated that it was a standalone incident.

Amid debate over who will bear the liability of the fraud, PNB said it has advised lenders to move swiftly to recover dues. It further said it has proposed that other banks in the consortium financing the groups, accused of fraud, initiate action to “protect the financial interest of the banking system at large”.


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