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                                  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
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