Punjab National bank approves investment of Rs 500 cr in PNB Housing Finance's rights issue

State-owned lender Punjab National Bank (PNB) is set to participate in the Rights Issue of its subsidiary PNB Housing Finance Limited with an aim to maintain minimum shareholding in PNB HFL. 

According to an official statement of PNB, the board of the public sector bank has approved an investment of Rs 500 crore by participating in the rights issue of PNB Housing Finance. 

The investment by PSU lender in its housing finance arm will help PNB in maintaining its shareholding at 30 per cent or below but above 26 per cent and retain its status as a promoter, the bank said in an exchange filing. 

PNB Housing Finance is looking to raise Rs 2,000 crore by issuing nonconvertible debentures (NCD) on a private placement basis. The board of the mortgage lender will consider and approve the proposal of issuance of NCDs on June 14. 

The promoter holds over a 32.5 per cent stake in the subsidiary, as per the latest shareholding pattern of PNB HFL available on the BSE. 

PNB last week raised its marginal cost of funds-based lending rate by 15 basis points or 0.15 per cent across all tenures. The new rates are effective from June 1. 

The revision follows an off-cycle rate increase by the Reserve Bank in May. The central bank hiked the repo rate -- at which it lends short-term money to banks -- by 0.40 per cent to 4.40 per cent. 

With the revision, one-year MCLR has increased to 7.40 per cent from 7.25 per cent earlier.