NEW DELHI, Nov 24: The Punjab National Bank (PNB) will pump Rs 24 crore into its subsdiary, PNB Assest Management Company (PNB AMC), to keep its promise to repurchase its mutual fund units at face value.Currently, the units are traded below the face value of Rs 10. ``We had promised the unit holders of our scheme `PNB premium' to pay the face value at any time they wanted to sell, and to keep the promise, the money is being put into the subsidiary,'' Rashid Jilani, PNB chairman and managing director, said today.Considering the weak position of this close-ended growth fund, the promoter PNB is now bringing in the money to salvage the image of its mutual fund. Jilani said another objective of investment in the AMC is to keep in line with the Securities and Exchange Board of India (Sebi) regulations to have minimum net worth of Rs 10 crore for mutual funds.The paid-up capital of PNB AMC after this will increase to Rs 29 crore from the present level of Rs 5 crore. At the time of the launch of the scheme `PNB premium' in 1994, it had promised the potential investors in the scheme to buy-back the units at issue price of Rs 10 each.The current net asset value of the scheme is Rs 8.24 per unit, a straight Rs 1.76 below the face value and this amount has to be to paid to the investors to avoid an early redemption due to panic off-loading.PNB Premium is the biggest fund with unit capital of Rs 106 crore and according to the scheme designed by the fund, it will buy a maximum of 1500 units per individual. Despite the allocation of Rs 24 crore to PNB AMC, the bank reported higher operating profit of Rs 460.15 crore in the first half of current financial year compared to Rs 270.22 crore during the same period last year.However, net profits of the bank declined to Rs 189.96 crore from Rs 214.11 crore for first six months of last year.Jilani said the drop in net profits has been due to the provision of Rs 270 crore made for tax and bad debts, which was not made last year."These provisions have been to made to bring more transparency in the banks financials before we hit the primary market," Jilani said. He said provision has also been made to keep in line with Sebi guidelines, which says that all provisions has to be made before a bank hit the capital market with a public offering.
