Punjab National Bank (PNB) will offload part of its shareholding along with management control in PNB Asset Management Company Ltd (PAMC) as well as PNB Capital Services Ltd (PCS). The bank has also engaged SBI Capital Markets to identify buyers for these wholly owned subsidiaries.
PNB has also submitted a restructuring proposal for PAMC to the Reserve Bank of India (RBI). The apex bank was agreeable to the proposal to permit both subsidiaries to operate and look for partners, if and only if, these companies remained in the black for the whole of 2001-02. Both companies were expected to register profits in 2001-02.
As PCS had registered net profit of Rs 1.83 crore in 2000-01, PNB has requested the apex bank to reconsider its decision and allow the induction of a joint venture partner. The bank is awaiting RBI response in this regard. It has also started scouting for a joint venture partner and initiated changes required to induct such an entity.
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S S Kohli, chairman and managing director of PNB, said: "The company has started measures to expedite recoveries and improve its financial condition." PCS and PAMC were directed to be closed down as they have been incurring losses.
PAMC started incurring losses mainly due to its two assured return schemes. Both schemes were redeemed and the company earned a profit of Rs 0.39 crore as on September 2001. Subsequently, on PNB's request, RBI allowed it to submit a restructuring proposal and advised that, as the matter was under review, no new scheme was to be floated.
PCS recorded net loss of Rs 1.42 crore in 2000-01, and had accumulated a loss of Rs 9.15 crore. Net worth, as on March and September 2001, stood at Rs 12.25 crore and Rs 14.18 crore respectively. Focus on non-fund based business along with stricter income recognition, asset classification and provisioning norms and lease equalisation charge rendered PCS unviable.
PAMC recorded net and accumulated losses of Rs 0.74 crore and Rs 12.17 crore. Networth, as on March and September 2001, were Rs 16.79 crore and Rs 17.19, respectively.