Public sector major Punjab National Bank has decided to dilute 26 percent stake from its housing finance venture, PNB Housing Finance Ltd. (PNBHF) to Dawnay Day. The board has approved for dilution up to 49 percent in the housing finance arm.

After announcing the results for FY08-09, KC Chakrabarty, chairman and managing director of PNB said, "Today the board has decided to divest a 26 percent stake in PNB Housing Finance Ltd,". He added that the board has approved dilution of up to 49 percent stake in the housing finance arm, though the actual dilution will take place at appropriate time.

"We have invested Rs 7 crore and expect to get 10-11 times from the 26 percent stake sale", said Chakrabarty.

Dawnay Day is a US based non-banking financial company under the control of private equity fund New Silk Route.

PNB also plans to enter in 60:40 joint ventures with foreign Malta-based Fin Bank.

PNBHF is a wholly-owned subsidiary of the PNB. The company has recorded a 20 percent increase in operating profit and a 32 percent increase in net profit for year ended on March 2009 against the previous year. The total income during FY 08-09 stood at Rs 277.21 crore, which is a 22 percent increase over the previous year. The gross NPAs of the company were 0.50 percent, while net NPAs were 0.30 percent of the net advances for FY 08-09. PNBHF declared a 20 percent dividend for the year.