MSMEs' 180-day repay period demand genuine: PNB MD & CEO Atul K Goel

The state-owned Punjab National Bank (PNB) has revised its guidance for Gross Non-Performing Assets (GNPA) for the ongoing financial year (FY25) to 4 per cent from the current 4.9 per cent, said Managing Director and Chief Executive Officer Atul Kumar Goel in a video interview with Harsh Kumar. Goel discussed the public sector lender’s latest quarterly results and its expansion plans. Edited excerpts:

What is your PNB guidance for FY25 in terms of growth?

Our guidance for credit growth for FY25 is between 11-12 per cent, and for deposit growth, it is 9 per cent. For Net Interest Margins (NIMs), it is 2.9-3 per cent for this year. We have revised our guidance for Gross Non-Performing Assets (GNPA) to 4 per cent, down from the current 4.9 per cent.

How do you view the government’s announcement in the Budget for ‘special mention account’ (SMA) stage accounts of Micro, Small and Medium Enterprises (MSMEs)? Will it put more burden on banks?

From July 1, 2020, till Sunday, for the MSMEs, we have sanctioned almost Rs 90,000 crore in loans and disbursed Rs 83,135 crore, with Rs 57,000 crore outstanding in the last four years. There is more risk in the MSME sector compared to housing and others. Now the government believes that providing support at the SMA 1 stage is good. I also believe there is a need to provide viability not only in SMA 1 or SMA 2 but also in the NPA stages. Sometimes MSMEs face delayed payments. Although the act has been introduced, let's see how it will be implemented. The demand from the MSME sector for a 180-day (repayment) period is genuine.

The step announced in the FY25 Budget for public sector banks to build their in-house capability to assess MSMEs for credit instead of relying on external assessments is also a welcome step. We need to understand MSME businesses, not just their balance sheets. Currently, we do this in the name of a viability report.

Why is PNB's personal loan segment falling?

In the last two quarters, we have seen a decline in the trend of personal loans as many eligible customers are not taking loans because they don’t need them at the moment.  

Can you give some numbers on recovery from National Company Law Tribunal (NCLT) accounts?
 

In the last year (FY24), we recovered over Rs 3,600 crore through NCLT. This year (FY25), we expect to recover over Rs 3,000 crore through it. In Q2FY25 alone, we expect a recovery of Rs 1,200 crore. Of the Rs 18,000 crore of recovery, 35 per cent is from corporate accounts, and the rest are NPAs. We are receiving recoveries from sectors such as food processing companies and steel companies; major accounts have been resolved. We are also expecting some recoveries from road projects.

What kind of trends are you seeing in deposits?
 

There is a gap in deposits compared to credit growth. We are not engaging in bulk deposits from the market because they are costly and do not serve our purpose. We are continually adding new customers. Last year, we added one crore new customers. We plan to add 150 new branches this year. As of June 30, 2024, we had a total of 10,150 domestic branches and two international branches.