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    PNB may dilute MetLife stake via IPO

    Synopsis

    PSU bank will also buy stake in financial technology firm CapitaWorld along with other lenders.

    ET Bureau
    NEW DELHI: Punjab National Bank (PNB) may sell an around 4 per cent stake in insurance venture PNB MetLife through an initial public offering, people in the know of the plan told ET.

    PNB managing director Sunil Mehta confirmed that the bank would dilute its stake in the insurer through an IPO. Mehta, who is also its CEO, said this was only for price discovery and refused to divulge the amount of stake it would sell.

    The bank will buy a stake in financial technology firm Capita-World with other lenders including State Bank of India. Capita-World has a digital platform that automates the entire loan value chain, quickening the loan approval process.

    “This is going to be a big differentiator going ahead as all the processing of loan applications will be based on algorithm, thus automating the loan process,” said Mehta, adding that this service would be primarily for loans up to Rs 2 crore.

    PNB MetLife is a joint venture among PNB (30 per cent), Elpro (21 per cent), M Pallonji & Company (18 per cent), Jammu and Kashmir Bank (5 per cent) and MetLife (26 per cent). It has a share capital of Rs 2,128 crore.

    If the insurer goes for an IPO now, it will become the fourth life insurance company in India to list on stock exchanges.

    Mehta told ET that the bank was looking to raise around Rs 8,000 crore primarily through sale of non-core assets and internal accrual. The bank plans to sell its 32.79 per cent stake in PNB Housing Finance and appointed merchant bankers for this.

    Mehta said the state-run bank was on path to recovery and a Rs 2,816-crore capital support announced by the government this week would further strengthen the bank.

    It has set a target to recover around Rs 20,000 crore from its nonperforming assets in the first half of this fiscal year. It has already recovered around Rs 5,600 crore in the first two months of the fiscal year from bad loan accounts.

    To ensure better accountability and operations, PNB is shifting most of its large accounts and lending operations to over 60 specially designated branches. The move is a part of a credit restructuring exercise, said Mehta.

    On the power sector, which accounts for a large chunk of bad loans on bank books, Mehta said direct transfer of subsidy benefits there could reduce power thefts and help save the stressed sector.

    “A scheme similar to Pahal (for direct transfer of LPG subsidy) can be implemented where the subsidy will be directly transferred in the beneficiary account," said Mehta.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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