Public Sector lender, Punjab National Bank (PNB) has sold 26 per cent stakes in PNB Housing Finance, the housing finance arm of bank to Dawnay Day, a financial services company controlled by Indian equity fund New Silk Route (NSR) controlled by ex-McKinsey chief Mr. Rajat Gupta.

New Silk Route may also raise its stake to 49 per cent by issuing shares in the firm.

Dr K. C. Chakrabarty, Chairman and Managing Director of PNB said, "Today, our board has approved the divestment of 26 per cent in PNB Housing Finance. Dawnay Day has been identified as the strategic partner in our housing subsidiary."

The bank is expected to raise Rs 70-80 crore by selling the stake by June this year. PNB Housing Finance reported 32 per cent rise in its net profit at Rs 53.41 crore for the fiscal 2008-09.

Another Indian public sector bank, IDBI is also planning to divest shares in its housing finance unit, IDBI Home Finance for which Dewan Housing Finance Corporation is said to be in race.

LIC Housing Finance is also working on the ideas to divest 10 per cent stake in a bid to raise funds for its financial needs.