The largest Public Sector Bank (PSB), Punjab National Bank (PNB), chose to sell all of its stock in Asset Reconstruction Company (India) (ARCIL) on Thursday for a predetermined price.
At the moment, PNB owns 10.01% of ARCIL. The bank intends to sell its interest in the ARC by the end of December 2022.
PNB will stop being a sponsor and shareholder in ARCIL after the divestiture is complete because its shareholding would be NIL. The exchange will take place in cash.
The bank will sell 3,25,06,486 equity shares, or 10.01 percent of its stake in ARCIL.
PNB stated in its regulatory filing that the Reserve Bank of India had reviewed the policy on banks' investments in ARCs as justification for divestments.
As a result, it was determined that banks could only sponsor one ARC at a time and that their participation in other ARCs could not exceed 10% of the ARC's paid-up equity capital, subject to any current prudential investment rules. Following that, Bank was instructed to adhere to the aforementioned requirement. "
According to PNB, "the Bank has chosen to sell its whole investment in ARCIL at an agreed price" in order to "comply with the foregoing parameters and based on the market condition."
ARCIL was established in 2002 and is now regarded as one of the top ARCs in the nation. ARCIL recorded total revenue of 3.04 crore in FY22 as opposed to 1.73 crore the year before.
The revenue totaled 1.66 crore in FY20. Despite this, ARCIL's overall income has consistently increased throughout the course of the last three fiscal years.
The RBI must give its consent for PNB to sell its stake in ARCIL. After the share purchase agreement (SPA) between PNB and the buyer, to whom the bank would sell its 10.01% ownership in ARCIL, has been executed, authorization will be granted.
PNB shares on the BSE closed unchanged at 34.80 per share, down from the previous closing of 34.85 per share.
The intraday high and low prices for the shares were 35.80 and 34.25, respectively. The bank now has a market value of 38,318.33 crore.
The bank reported a net profit of 308 crore in the first quarter of FY23, a decrease of 69.8% from the profit of 1,023 crore in the same quarter the previous year.
In addition, the bank's interest income fell to 18,757 crore in the June 2022 quarter from 18,929 crore in Q1FY22.