Punjab National Bank reduces its debt recast target

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Indian multinational banking and financial services company, Punjab National Bank (PNB) had reduced the debt recast target by 50 percent to Rs 20,000 crore. Two months ago, the Reserve Bank of India (RBI) had allowed a one-time restructuring of corporate and personal loans to promote entities in the situation of the COVID-19 crisis. But there was not enough demand for restructuring and so PNB decided to reduce their debt recast targets.

S S Mallikarjuna Rao, MD of PNB commented that by the end of September the bank had managed with the restructuring of both retail and Micro Small Medium Enterprises (MSMEs) to the extent of Rs 41 crore. They had got another request of Rs. 30 crores concerning retail and MSME. But the bank is expecting to have a restructuring of around Rs 4,000-5,000 crore in MSME before December 31, 2020.

In the case of corporate accounts, it is very relevant that the ratings will be under pressure for two years if the restructuring of corporate is undertaken. As far as the corporates are concerned, PNB has received applications from 15 applicants which amount to Rs 2,022 crore.

Rao said that he expects PNB’s Non-Performing Assets (NPAs or bad loans) are to be less than 14 percent in gross terms and less than 5 percent in net terms. The lender’s gross NPAs moderated to 13.43 percent of gross advances at the end of September from 16.76 percent by the year-ago same period. Net NPAs are also declined from 7.65 percent to 4.75 percent. He added that the bank has not increased its service charges and, there is no such plan to increase the charges from the present level.

When taking into consideration the merger of Oriental Bank of Commerce and United Bank of India, Rao conveyed his viewpoint that business and human resource integration has already taken place. These two banks had merged with PNB in April. After the merger, the bank currently had about 11,000 branches, more than 13,000 ATMs, and 1.05 lakh, employees. As far as the technology integration is distressed, Rao commented that the consolidation activities are now in progress.

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