NEW DELHI: Punjab National Bank on Wednesday announced that it would dilute Government equity to 51 per cent as part of its plan to raise Rs. 2,000 crore in 2007-08 to finance overseas expansion and meet mandatory capital requirements.

"We may have to dilute government holding to 51 per cent this fiscal,'' PNB Chairman and Managing Director S. C. Gupta told newsmen here while declaring the 2006-07 financial results.

Mr. Gupta said the bank had the approval of the board to bring down the government holding from 57.1 per cent to 51 per cent. "We need capital... so we need to dilute government shareholding for meeting Basel II requirement and overseas expansion plan and address increasing risk weightage in the wake of growing business,'' he said.

Mr. Gupta said the bank might come out with a public offer sometime after June or September.

PNB came out with its initial public offering in 2000 and further raised capital by floating a follow-on public offer in 2005.

bank's capital adequacy ratio stood at 12.29 per cent and it had enough headroom to raise fund as both Tier I and Tier II capital, he said.

The bank also reported a 17.5 per cent dip in the net profit at Rs. 238 crore in the fourth quarter of 2006-07 from Rs. 288.67 crore in the same period in the previous year on higher provisioning towards taxes, depreciation of government securities, pension and other benefits of bank employees.

Earlier, the board declared a final dividend of 60 per cent, taking the full dividend for 2006-07 to 100 per cent, subject to shareholders' approval. The net profit for 2006-07 rose seven per cent to Rs. 1,540.08 crore from Rs. 1,439.31 crore a year ago, while total income increased 15.9 per cent to Rs. 12,579.78 crore from Rs. 10,857.65 crore.

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