PNB Housing to seek shareholders' nod to raise Rs 45,000 cr through NCDs

Bonds/non-convertible debentures constitute significant portion of company's total borrowings, says state-owned lender

PNB Housing Finance said it will seek shareholders' approval next month to raise up to Rs 45,000 crore through debt securities. The company's annual general meeting is scheduled to take place on August 5, 2020.

Shareholders are being requested to authorise the board of directors to offer, from time to time, the subscription of redeemable, secured/unsecured non-convertible debentures (NCDs) aggregating up to Rs 45,000 crore in one or more tranches, PNB Housing Finance said in a regulatory filing.

The housing finance company may issue the bonds through private placement or by way of public issue.

As on March 31, 2020, bonds/non-convertible debentures constitute significant portion of the total borrowings of the company, it said.

Borrowings through these instruments facilitate the raising of resource in a highly flexible and requirement driven manner, it added.

"The company intends to raise long term funds through bonds in the current year as well to meet lending requirements. It is therefore proposed that the members authorise the board to borrow money through NCDs up to Rs 45,000 crore outstanding at any time through private placement offer letter and/or by way of public issue from time to time," PNB Housing Finance said.

In 2019-20, the company had net interest income of Rs 2,308 crore, registering a growth of 12 per cent from a year ago.

However, disbursements in FY20 fell by 48 per cent to Rs 18,626 crore. The assets under management (AUM) dipped 2 per cent to Rs 83,346 crore as on March 31, 2020. As much as 82 per cent of the AUM comprised retail assets.

The company, promoted by the country's second largest state-owned lender Punjab National Bank (PNB), in its annual report said that 2019-20 was a challenging year for the sector as well as the company.

"We focused on strengthening our balance sheet. With a prudent sourcing strategy, we maintained a healthy liquidity position and built a strong deposit franchise, considered the second largest in the market," it said.

Responding to the Covid-19 pandemic, the company said its focus will be on mass housing and capital-efficient retail segment.

It will also focus on tightening of underwriting policy, reduce operating expenses as well as re-prioritise its IT initiatives.

"Overall housing credit growth is expected to be slower in the first half of FY 2020-21, while recovery in the second will depend on the economic turnaround," its Chairman S S Mallikarjuna Rao.

The pressure on asset quality is expected to mount with the impact being felt across all segments -- housing loans, loan against property and construction finance, said Rao, also the MD and CEO of Punjab National Bank.

Neeraj Vyas, managing director and CEO, PNB Housing Finance, said that it would be premature to ascertain the fallout of the pandemic at this point as the situation remains fluid.

"The company will continue to focus on lower risk weighted retail loans serving both salaried and self-employed segment...The Company will continue to sell down its corporate book and is in discussion with a few banks, to this end," Vyas said.

PNB Housing is assured of the full support of its promoter, Punjab National Bank, in addressing any uncertainty arising out of the changed operating environment, he added.