PNB to invest Rs 500 cr abroad

The country's fourth largest bank, Punjab National Bank (PNB), has drawn up plans to invest up to Rs 500 crore overseas as it converts its representative office at London into a wholly owned subsidiary and sets up a unit in Canada.

The New Delhi-based bank has also applied to the Reserve Bank of India (RBI) to launch operations in Pakistan, possibly through branches in Islamabad and Lahore.

The bank has filed an application with the UK regulator, Financial Services Authority (FSA), to upgrade its representative office into a subsidiary to be named PNB International Ltd, PNB chairman S C Gupta, told a press conference here today.

Gupta would next month travel to Canada and Singapore to further the bank's entry into the two countries. PNB would apply to the Office of Superintendent of Financial Institutions at Ottawa in Canada to start a subsidiary called PNB Canada.

The bank plans to infuse around Rs 41 crore of initial capital into the proposed Canadian subsidiary to carry full fledged banking business.

The bank wants to open an offshore banking unit in Singapore and also a branch in Hong Kong.

PNB does not intend to merge its home finance subsidiary PNB Housing with itself. It expects PNB Housing to report a net profit of Rs 40 crore in 2006-07, up from Rs 28 crore in 2005-06.

Gupta said the bank has achieved 30 per cent of the 2006-07 target in terms of advances and deposits by July 2007. The bank has set a target of 18-20 per cent growth in deposits and advances in 2006-07.

The bank's retail credit had grown by 48.9 per cent to Rs 18,180 crore at the end of June 2006 from Rs 12,206 crore a year earlier. Retail credit constituted 22.9 per cent of credit as on June 2006, up from 20.8 per cent in June 2005.