PNB recoveries on track; Rs 130 bn recovered, upgraded in Q1, Q2: MD & CEO

Punjab National Bank (PNB) is well on its way to achieving its target of recovery and loan upgradation for the financial year with almost Rs 130 billion recovered and upgraded in the first two quarters, said Sunil Mehta, managing director and CEO of the bank. The bank is also expecting that the Fugitive Economic Offenders Bill, 2018, once implemented, will help it recover some amount from the Rs 130 billion related to the alleged Nirav Modi scam.     

"We have put up a target of Rs 175 billion of recovery in cash and around Rs 45 billion of upgradation of NPAs (non-performing assets), which would make Rs 220 billion of recovery and upgradation during the current financial year. In the first quarter itself, we have made a recovery of Rs 84.45 billion. If we include the second quarter, the results are yet to be announced, but we are on track. The total recovery we have made up to the second quarter is of over Rs 130 billion. We are ahead of our track," he said. He was in Chennai to launch a trade finance centre and a centralised loan processing centre. 

The bank is expecting major resolutions in the third quarter, especially because a lot of NCLT (National Company Law Tribunal) cases, which could not be settled during the second quarter, might come up for settlement in the third quarter. That will provide it with a cushion in terms of its recovery and write back of provisions. "(For) a few of the assets, we are even getting more than book value. That will give us good write back in our existing portfolios," he said.   
 

During the first quarter, there was a recovery of Rs 33 billion in two accounts through the NCLT, while in the second quarter, much could not come through that route. The bank is expecting major recoveries from matters referred to the NCLT in the third quarter.    

Commenting on the alleged Rs 130-billion Nirav Modi scam, he said that that has not been factored into the present recovery target, but the bank is hopeful since the government has come up with the Fugitive Economic Offenders Bill, 2018, and with that Bill, if some person is declared as a fugitive, then the person will not have the civil remedy to go to court. In that case, whatever properties that have been attached, the banks can release them quickly and go for sale. A lot of assets have been attached and the Enforcement Directorate is already on the job of declaring the economic offenders and fugitives. 

"Once the process is complete, we have better chances of getting the securities to be released to the banks for recovery. It is too premature to comment on how much the bank will get, but whatever we get, it will be a bonus," he said. 
 

The bank is also fully on track for the sale of non-core assets. It has already sold six per cent stake in PNB Housing Finance and got Rs 13.21 billion realisation out of it. It has received roughly Rs 5 billion realisation during this quarter through asset sales and plans are to mobilise around Rs 86 billion through the sale of assets during this financial year, he said. 

The bank has embarked upon a journey to bounce back during the current financial year. This is reflected during the first quarter of the financial year. During the first quarter, the bank registered 30 per cent growth in operating profit. He added that the government has also shown confidence in the bank and capital of Rs 82.47 billion has been infused by it in two tranches -- the first of Rs 28.16 billion and the second tranche of Rs 54.31 billion. 
 

Following issues such as the scam, the bank has decided to improve its system and process so that such problems do not recur. It has integrated Swift system with the CBS system and, as a second stage, created trade finance centres so that all the financial trade transactions are passing through the centre. Further, there is a third level of authentication before the money gets remitted.