STUNG BY the fraud case involving billionaire Nirav Modi, Punjab National Bank (PNB) has diverted its energy and manpower to recovering loans.
Sources told The Indian Express that on June 1, the bank put in place a recovery cell in each of its 6,900 branches and deployed close to 25,000 employees to recover bad loans. On the same day, it created a Stressed Asset vertical at its central headquarters, with four general managers tasked with fast-tracking the recovery of Non-Performing Assets (NPAs).
“The bank has trained its energies on recoveries and is set to meet the target set for the quarter ended June 2018. In order to strengthen the recovery process, a recovery cell has been set up in each of the over 6,900 branches of the bank and employees within the branches who were earlier involved with other functions have been deployed in the recovery cell,” sources said.
“About 3000 personnel from various operations have been moved to the stressed asset vertical, whose sole job is to focus on recoveries,” sources said.
With 10 more days left in the ongoing quarter, the bank has managed to recover Rs 7,000 crore worth of bad debt in this period against a target of Rs 8,000 crore. In comparison, the bank recovered Rs 5,617 crore in the whole of financial year 2017-18.
While a majority of the recovery proceedings of Rs 7,000 crore would be diverted towards provisioning adjustments, the bank is expected to add around Rs 3,000 crore to its profits in the June quarter, sources said.
The recovery process was bolstered by resolution of Bhushan Steel and Electrosteel under the Insolvency and Bankruptcy Code from which the bank received nearly Rs 3,500 crore, and the remaining amount was mostly recovered from smaller accounts, sources said.
According to sources, the bank is likely to receive over Rs 3,300 crore from the likely resolution of Bhushan Power, Essar Steel, Ruchi Soya and Andrak Aluminium under the IBC.
Among other measures to boost the recovery process, the bank also implemented changes that provide additional powers to branches to resolve recovery cases. “Each branch has been given powers to decide on one-time settlement (OTS) of cases up to Rs 25 crore. This is helping decentralise and speed up recovery. Every branch has a recovery vertical to intensify recovery efforts,” sources said.
A senior PNB official said recovery of accounts above Rs 5 crore and up to Rs 25 crore will be helmed by the four DGMs at the corporate office while that above Rs 25 crore will be managed by GMs.
Last month, PNB posted a net loss of Rs 13,416.91 crore for the January-March quarter, the biggest ever by any domestic lender, as provisions against expected loan losses tripled along with an across-the-board deterioration in performance.
PNB also made a provision for Rs 7,178 crore in the fourth quarter for loss incurred on account of the Letter of Undertaking (LoU) fraud perpetrated by Nirav Modi allegedly in connivance with some bank officials. This provision is 50 per cent of the total amount of Rs 14,356 crore and the remaining amount will be covered in three quarters of current fiscal year.
PNB’s Gross NPAs ratio jumped to 18.38 per cent of gross advances at the end of March 2018, up from 12.53 per cent a year ago. Its net NPAs also soared to 11.24 per cent.