India's Punjab National Bank Eyes $1.96 Billion Bad Loan Recovery in FY25, CEO Says
Saturday, Feb 1, 2025 12:47 am ET
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Punjab National Bank (PNB), India's second-largest public sector bank, is targeting a significant bad loan recovery of $1.96 billion (Rs 3000 crore) in the current fiscal year (FY25), as per the bank's managing director and CEO, Atul Kumar Goel. This ambitious target is part of PNB's strategy to improve its asset quality and financial performance.
PNB's bad loan recovery strategy involves several key initiatives:
1. Aggressive Loan Recovery: PNB is focusing on aggressive loan recovery, improving collections, and being cautious about monitoring loans. The bank aims to recover double the amount of fresh slippages this year, as stated by Goel in an interview with Moneycontrol on May 25, 2023.
2. Insolvency Route: PNB has 224 cases in process under the insolvency route for recovery. Some of the prominent cases include listed free zone developer and operator Arshiya Ltd, Study Industries, and Vadraj Cement. The bank expects to recover Rs 3000 crore from these cases, with Rs 200 crore already recovered in Q1, Rs 1210 crore expected in Q2, Rs 990 crore in Q3, and Rs 590 crore in Q4.
3. National Company Law Tribunal (NCLT) Cases: PNB has recovered Rs 693 crore in the June quarter and Rs 778 crore in the September quarter from bad accounts referred to NCLT. The bank is hopeful to recover Rs 1,936 crore in the December quarter and Rs 588 crore in the March 2023 quarter.
4. Provisioning and Capital Infusion: PNB has raised Rs 5,000 crore through a Qualified Institutional Placement (QIP) route, Rs 1,300 crore from non-core assets stake sales, and Rs 5,473 crore through capital infusion. The bank has also benefited from the Reserve Bank of India's (RBI) decision to reduce provisioning for NCLT cases from 50% to 40%, unlocking 10% (Source: Sunil Mehta, CEO, PNB).
PNB's bad loan recovery target is quite ambitious compared to other public sector banks in India. The bank's success in achieving this target can be attributed to its aggressive loan recovery efforts, improved asset quality, strategic tackling of bad loans, and favorable provisioning norms. However, PNB also faces challenges such as higher provisioning, fresh slippages, and the struggle of investigating agencies to recover funds from scamsters.
In conclusion, Punjab National Bank's bad loan recovery target of $1.96 billion in FY25 is a testament to the bank's commitment to improving its asset quality and financial performance. The bank's aggressive loan recovery efforts, strategic tackling of bad loans, and favorable provisioning norms are likely to contribute to its success in achieving this target. However, the bank also faces challenges that it must overcome to fully realize its recovery goals.