"At this point of time, there is no compulsion to exit. We have spoken to Irdai. There is continuity. There is a time we will take a decision on that," PNB Managing Director S S Mallikarjuna Rao told PTI when asked if regulation restricts a lender having stake in two life insurers.
"Irdai says there is no regulation currently. So, both can continue," he added.
Further, there is tie up with Life Insurance
Corporation of India (LIC) for selling its products through the bank's branches.
Rao further informed that PNB has started focussing on growth post-merger and planned a series of capital raising initiatives, including rights issue and FPO, in the third quarter this fiscal.
At the moment, the bank is adequately capitalised with the capital adequacy ratio of 14.04 per cent at the end of December 2019.
The government provided Rs 16,091 crore to PNB and Rs 1,666 crore to United Bank of India in September for enhancing the capital base of these two lenders.
Going forward, Rao said, "the bank plans to further infuse capital during the current fiscal, including through follow-on public offer (FPO)."
"PNB is currently looking to raise Rs 3,000 crore through additional Tier-I (AT-1) bonds in the next couple of months," Rao said, sharing details of the capital raising plan.
"The board of the bank has already given approval and now we are contemplating approval from the government of India," he said, adding the bank is preparing to raise AT-1 bonds during the first quarter itself, depending on how quickly normalcy is restored.
Under the Basel-III norms, AT-1 bonds come with loss absorbency features, meaning that in case of stress, banks
can write off such investments or convert them into common equity if approved by the RBI. AT-1 bonds, which qualify as core or equity capital, are one of the means of raising capital by banks.
In the third quarter of the current fiscal, Rao said, "we are planning to go to the market either of QIP or follow on public offer or for the rights issue".