Shares of Punjab National Bank (PNB) are up 1.5% at Rs. 169, as the PSU bank has announced an equity  infusion to the tune of Rs. 870 crore by the Central Government, at a premium to current market price.

While the fund infusion was known earlier, the exact details, as to the pricing and number of shares, was announced late Monday evening. 4. 42 crore equity shares of face value of Rs. 2 will be issued at a price of Rs. 196.80 per share on preferential basis (including premium of Rs. 194.80). Since based on the SEBI prescribed formula, the preferential issue of shares will be made at the premium of over 16% to the current market price, the stock has reacted positively.

Capital is lifeline for any finance business. PNB has, only last week, raised Rs. 1,500 crore through Basel III compliant perpetual debt instruments, in addition to Rs. 1,000 crore worth of long term bonds. Thus, PNB’s Capital Adequacy Ratio (as per Basel III), which stood at 11.54% as of 31^st December 2014, will strengthen further.