The Reserve Bank of India prevented Punjab National Bank's public-sector lender from participating in its housing finance subsidiary's fund raise as the regulator first favoured the lender's use of available capital for its own needs. PNB had tried to invest Rs 600 crore as part of PNB Housing Finance's Rs 1,800 crore fund raising programme, according to two individuals with direct knowledge of the matter. In August 2020, the bank wrote to the RBI requesting permission to invest in its subsidiary through a rights issue. PNB Housing Finance told exchanges on Feb 20, 2021, that its parent, without citing a reason, will not participate in the capital raising process.
In December, PNB launched a qualified institutional placement of equity shares to raise Rs 7,000 crore but succeeded in raising just Rs 3,788 crore. A merchant banker, with direct knowledge of PNB’s share placement, said that the bank had failed to attract further investor interest owing to low return ratios and large stress on the books. The bank is expected to raise the remaining Rs 3,200 crore