PNB will sell its entire stake in ARCIL, planning to complete the divestment by the end of December | Popgen Tech


A leading public sector bank (PSB), Punjab National Bank (PNB) on Thursday decided to sell its entire stake in Asset Reconstruction Company (India) (ARCIL) at an agreed price. PNB currently has a 10.01% stake in ARCIL. The bank plans to divest its shares in ARC by the end of December 2022.

On completion of divestment, PNB will cease to be a sponsor/shareholder in ARCIL as the shareholding will be NIL after the sale of shares. The transaction will be done in cash.

The bank will divest approximately 3,25,06,486 equity shares or 10.01% shares in ARCIL.

In its rationale for the disinvestments, PNB in ​​the regulatory filing said, “The Policy on Investment by banks in ARC has been reviewed by the Reserve Bank of India. Accordingly, it has been decided that the banks can sponsor only one ARC at any point of time and banks. ” investment in other ARCs should be less than 10% of the paid up share capital of the ARC subject to existing prudential norms on investment. Thereafter, the Bank was advised to comply with the above stipulation.”

Further, the PNB said, “to comply with the above guidelines and based on the market scenario, the Bank has decided to sell its entire share of ARCIL at an agreed price.”

ARCIL was established in 2002 and is among the leading ARCs in the country. In FY22, ARCIL reported a total revenue of 3.04 crore compared to 1.73 crore in the previous fiscal. In FY20, revenue was at 1.66 crore. That said, in the last three fiscals, ARCIL has made consistent growth in its total revenue.

The divestiture of PNB in ​​ARCIL is subject to RBI’s approval. The permission will be obtained after the execution of the share purchase agreement (SPA) between PNB and the buyer to whom the bank will offer its 10.01% shares in ARCIL.

On BSE, shares of PNB ended flat at 34.80 per piece compared to the previous closing of 34.85 per piece. Shares moved to intraday highs and lows of 35.80 per piece and 34.25 per piece respectively. The bank’s market cap is currently 38,318.33 crore.

As of 30 June 2022, PNB has a gross NPA of 90,167.10 crore — an improvement from 92,448.04 crore in Q1FY22. In percentage terms, the gross NPA is 11.27% against 11.78% in Q1FY22.

During the first quarter of FY23, the bank posted a net profit of 308 crore down 69.8% from a profit of 1,023 crore in the same quarter a year ago. The interest earned by the bank also fell 18,757 crore in June 2022 quarter against 18,929 crore in Q1FY22.

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