Page 5 - BANKING FINANCE OCTOBER 2021

BANK UPDATE

Banking News
Banking News
Banking News
Banking News
Banking News

PNB gets approval to raise Kotak cuts home loan rate filed a draft red herring prospectus
with the Securities Exchange Board of
Rs. 6,000 crore through to 6.5% India to raise funds through an initial

bonds Kotak Mahindra Bank, said it would cut public offering. While the IPO com-
the interest rate on home loans from prises a fresh issue of 1.5827 crore
The board of Punjab National Bank has
approved raising of capital through 6.65% to 6.5% - the lowest in the in- shares, it also has an offer for sale of
Basel III-compliant Additional Tier-1 dustry. This will be applicable for all loan up to 12,505 shares from existing
(AT-1) bonds and Tier II bonds up to an amounts for salaried people, for both shareholders. The offer will constitute
amount of Rs 6,000 crore. new and balance transfer cases and 10 per cent of the post-offer paid-up
valid for two months from September equity share capital. Proceeds from the
The plan approved by the lender's 10 to November 8. IPO will be used for augmenting the
board includes raising of AT-1 bonds or
With system liquidity at its highest ever lender's tier I capital base. The com-
AT-2 bonds or a combination of both. pany had said that it was planning to
The capital would be raised in one or at more than Rs 9 lakh crore, banks are raise more than Rs. 1,000 crore with
more tranches, the lender said in an increasingly looking at low-risk lending an IPO.
exchange filing. products in which they could cut the
rate of interest to get more customers.
As AT-1 bonds are considered to be risky, Kotak Bank continues to offer one of UCO Bank out of Prompt
the Securities and Exchange Board of the most competitive rates in the
India (Sebi) had earlier sought to value home loan industry, the lender said Corrective Action Frame-
banks' deemed residual maturity of through a release. "This special rate is work
Basel III additional tier 1 (AT1) bonds as available across all loan amounts and The Reserve Bank of India on Septem-
100-year debt from April 1. However, is linked to a borrower's credit profile," ber 8 lifted Prompt Corrective Action
after the finance ministry's opposition it said. Framework (PCA) on UCO Bank.
that such a move would increase bor-
rowing costs for public sector banks, the Kotak Bank, a relatively new entrant in The performance of UCO Bank was
regulator had relaxed the norms and the home loan segment, has been of- reviewed by Board for Financial Super-
said the maturity of such bonds would fering one of the lowest mortgage rates vision and it was noted that as per its
in the industry since it started. published results for the year ended
be 10 years until March 31, 2022, and
March 31, 2021, the bank is not in the
would be increased to 20 and 30 years
over the subsequent six-month period. Tamilnad Mercantile Bank breach of the PCA parameters, the
central bank said in a release.
From April 2023 onwards, the residual files papers for Rs. 1,000-
maturity of AT-1 bonds will become 100 UCO Bank has provided a written com-
years from the date of issuance of the crore IPO mitment that it would comply with the
bond. Tamilnad Mercantile Bank (TMB) has norms of minimum regulatory capital,

BANKING FINANCE | OCTOBER | 2021 | 5