P&S Bank draws turnaround plans

Hopes to recover Rs 200 crore from bad loans in 2005-06.

As part of its turnaround strategy, Punjab & Sindh Bank (P&S Bank) aims to bring down its net non-performing assets (NPAs) to 2 per cent by March 2008 from 8 per cent in the beginning of the current financial year.

The bank has recovered nearly Rs 100 crore from bad loans in the first six month of this year and expects to end 2005-06 with net NPA levels below 6 per cent.

"The bank is committed to turnaround by March 2008," a senior government official said. It had a loss of Rs 71 crore in 2004-05 but expects to register a profit of about Rs 50 crore for the half year ended 30 September.

With the Rs 500 crore capital infusion by the government taking care of Punjab & Sindh Bank's capital requirement, as per the Basel II norms, the bank is focusing on improving productivity and increasing business.

It has entered into a memorandum with its employees, according to which the latter's working hours have been extended by two hours. Overtime, too, has been done away with.

As part of its information technology initiative, Punjab & Sindh Bank plans to float a request for proposal (RFP) for implementing core banking solution (CBS) to link about 200 of its branches within the next 12 months.

"We expect to recover about Rs 200 crore from bad loans in 2005-06 and further upgrade outstanding of Rs 150 crore from bad loans to regular by recovery of overdue instalments," a senior bank executive said.

The bank is seeking fortnightly reports from its zones on the progress on recoveries and has reactivated a committee, which independently examines each compromise case where a concession of Rs 50 lakh or more is proposed.

The bank has 669 cases pending with the debt recovery tribunal (DRT) with outstanding worth Rs 825 crore. Besides, the bank is pursuing settlement through compromise and securitisation.

As part of the restructuring, Punjab & Sindh Bank plans to relocate some of its branches to maximise reach.

For instance, Punjab & Sindh Bank plans to relocate some of its branches located in the congested areas of the capital to outer areas.

The bank aims to increase its business, as with a staff strength of 9,600, its advances at Rs 6,322 crore in March 2005 were considerably low.

In comparison, Oriental Bank of Commerce with about 15,000 employees had advances of Rs 27,500 crore as in June 2005.

THE RECOVERY ROADMAP

Plans for an initial public issue in 2007-08

The bank plans to bring net NPAs below 6 per cent March 2006, below 4 per cent by March 2007 and below 2 per cent by March 2008

Targeting a net profit of Rs 100 crore in 2005-06

P&S Bank re-activated monitoring mechanism for recovery of bad loans, Actively pursuing cases through compromise and the debt recovery tribunal

Signed a memorandum with employees to increase working hours

Targeting a net profit of Rs 100 crore in 2005-06

To invite proposals to implement Core Banking Solution across 300 branches