Large exposures carefully scrutinised; will remain vigilant in good times

Swarup Kumar Saha, managing director (MD) and chief executive officer (CEO) of Punjab & Sind Bank, in an interview with Nikesh Singh in New Delhi says the lender has started the expected credit loss (ECL-) based provisioning that will provide a cushion in case of future guidelines. Edited excerpts:

How is the bank making the monitoring of large exposures more effective?

Today, large exposures happen in a more controlled mechanism. There are strong regulatory guidelines on the issue. Any large exposures that happen are very carefully scrutinised. The profiles of A and above-rated borrowers with credit of more than Rs 5 crore have increased from 43 per cent to 54 per cent year-on-year (Y-o-Y) in Q1FY24. The bank is very conscious of conserving the capital while growing. The underwriting standards from the corporate side are also important. The bank will not try to go into the past cycle. In good times also, the bank will remain vigilant and follow due diligence in securing the interests of all stakeholders.  

Has the bank started implementing ECL-based provisioning?
 

We have started slowly on the ECL-based provisioning as there is no formal guidance out yet. The bank is willing to strengthen the balance sheet by building up on these provisions both on the non-performing asset (NPA) side and also on the standard side. This will provide the bank with a cushion if there are any guidelines in the future.

Sequentially, the slippage in the retail segment grew from Rs 5 crore to Rs 81 crore in the first quarter of FY24. What are the reasons behind it? The rise in the slippage in the retail segment is under control. With the rise in interest rates, there will be some sort of retail slippage. But Y-o-Y, it has come down from Rs 90 crore to Rs 81 crore in Q1. We are working closely on the issue. Our early warning systems are much more activated and follow-up actions have started strongly.

The slippage in Q1ofFY24 stood at Rs 451 crore against the recovery of Rs 345 crore. What is the bank’s approach to enhance its recovery going forward?
 

The slippage went high due to the recognition of one mid-corporate account into NPA with an exposure of Rs 92 crore. It was an old restructured account under the Special Mention Account-2 and this had led to an additional provisioning of about Rs 42 crore in the April-June quarter. In July, the bank recovered around Rs 100 crore. The recovery of the bank is robust and we are confident of meeting the recovery target of Rs 1,500 crore in FY24.

The low-cost CASA deposits of the bank declined from 34 per cent to 31.69 per cent Y-o-Y in Q1. What is the bank’s plan to increase it?
 

CASA has two components: current account and savings account. The bank has witnessed 11 per cent YoY growth in current accounts in Q1FY24, which is much above that of many other banks. The savings account also grew at 4 per cent. Traditionally, our CASA has been low, so we need to build it up by getting salary accounts, current accounts, and getting technology. We are also bringing in more fintech and third-party partners so that our range of products increases.