PNB Plans Q3 Entry into Acquisition Finance with $2.5B FCNR Deposit Target

Punjab National Bank (PNB) Managing Director and CEO Ashok Chandra announced that the bank will initiate acquisition finance operations in the third quarter of the current financial year, following the Reserve Bank of India’s (RBI) recent regulatory approval. The move aligns with updated guidelines allowing banks to finance up to 75% of acquisition deal values, up from the earlier proposed 70%.

Chandra emphasized the significant potential of the acquisition finance market, stating that the bank has secured internal policy approvals and is evaluating strategic partnerships to launch the service. Initially, the focus will be on domestic entities to diversify PNB’s asset portfolio. The RBI has outlined strict conditions, including corporate guarantees, a maximum debt-to-equity ratio of 3:1 post-acquisition, and requirements for borrowers to maintain a net worth of at least Rs 500 crore and three consecutive years of profitability.

Separately, PNB has raised $425 million through its Foreign Currency Non-Resident (Bank) [FCNR (B)] deposit mobilization drive as of July 17. The bank aims to collect $2.5 billion by September 30, offering interest rates between 4.9% and 6.5% depending on tenure and deposit size. This initiative follows the RBI’s temporary removal of interest rate ceilings on FCNR (B) deposits maturing in 3-5 years, aimed at boosting inflows after a sharp decline to $946 million in FY26 from $7.1 billion in FY25.

The RBI had previously introduced similar measures in 2023 during periods of high dollar outflows. Meanwhile, PNB reported a standalone net profit of Rs 5,253 crore for the quarter ended June 30, 2026, marking a threefold increase from Rs 1,675 crore in the same period last year, largely due to reduced tax liabilities. Total income remained steady at Rs 37,231 crore, while interest income rose marginally to Rs 32,897 crore and net interest income improved by 2% to Rs 10,798 crore.

Source link