In order to expand it’s business, State owned Punjab National Bank has said that it would raise about Rs. 6000 via bonds. Basel III compliant debt instruments – Perpetual Addition Tier I capital Bonds and Tier II bonds will be considered by the board for issuance. Each is priced at Rs. 3000 crore respectively.
The meeting that will finalize this new scheme will be held on November 14th, the fund raising is based on the availability of the headrooms.
In the case of stress as the AT-1 bond under the Basel III norms, it will be able to absorb loss and the bank can write off such investments or convert them into common equity if approved by the RBI. AT-1 bonds qualify as core or equity capital.
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