K.C. Chakrabarty, CMD of Punjab National Bank, in Calcutta on Tuesday. A Telegraph picture

Calcutta, June 12: Punjab National Bank is considering a merger of its housing finance arm, PNB Housing Finance, with itself.

It also plans to restructure its primary dealer outfit, PNB Gilt, and float a subsidiary for venturing into the insurance business.

“PNB Housing Finance was formed at a time when the bank on its own was not giving home loans. Now, that the bank itself has taken up this business in a big way, it is logical that the housing finance subsidiary should be merged with the bank. This is also the trend in the industry,” said K.C. Chakrabarty, chairman and managing director of Punjab National Bank.

Chakrabarty said, “If I have my way, I would like to merge the housing finance subsidiary with the bank. But before that, we have to examine the pros and cons of such a merger. We will do it, if the merger increases the shareholders’ value and is profitable for the business. We have not yet undertaken that study, but will do it now.”

Chakrabarty said the bank will also consider an amalgamation of its primary dealer outfit, PNB Gilts, which is a listed company.

“Though PNB Gilts has a licence for merchant banking, it is mainly occupied with primary dealership business (underwriting government securities auctioned by the Reserve Bank of India). With the bank having its own primary dealership business as well, there is no reason why the bank should not take over the same line of business from PNB Gilts. In that case, the latter can take up merchant banking on a larger scale.”

“If PNB Gilts undertakes only merchant banking business, it can do so with less than Rs 500 crore it requires for primary dealership,” he added.

Punjab National Bank already has a licence from the Reserve Bank of India to start the insurance business.

“We got this licence two years ago through a subsidiary. The bank is also in negotiations with the Principal group, but somehow the company could not be started. We will take a relook at this business (insurance) venture,” Chakrabarty said.