Confirming this, PNB general manager PK Gupta said after the bond issue the bank's CAR would increase to 9.5-10 per cent from the current 8.81 per cent.The RBI in the busy season credit policy had announced that all banks will have to have a minimum CAR of 9 per cent by March 2000 as recommended by the Narasimham Committee on banking reforms.

"We have already written to finance ministry and the RBI to seek their permission for issuing bonds," Gupta said, adding that the bank hopes to hit the market in January next.

He said the coupon rate for the bonds has not been decided as yet and would depend on the prevailing market conditions at the time of theissue.Icra has already assigned an AAA rating for the bond issue, indicating highest safety for timely payment of principal and interest.

On the proposed initial public offering of the bank, Gupta said, "We do not think it is the right time to hit the markets looking at the current state of stock markets". PNB had initially planned to raise around Rs 550 crore from a public issue of equity shares at a premium of Rs 60-75 per share in January 1998. The bank had proposed to issue seven crore shares of Rs 10 each to increase its CAR following PNB repaying Rs 138 crore of its equity to the government which resulted in its capital base depleting to Rs 213 crore.