New Delhi: Punjab National Bank (PNB) has done full provisioning after being hit by a Rs 14,356 crore fraud at its Brady House Mumbai branch involving certain accounts in the gems and jewellery sector, the public sector lender’s Managing Director Sunil Mehta said on Tuesday.
“We are focussing on recovery and monitoring. Our first quarter recovery was Rs 8,445 crore as compared to Rs 5,617 crore last year. In the past 9 months, we did a recovery of Rs 16,608 crore,” Mehta said in an interview to ANI.
The public sector bank has identified areas for fastest recovery to turnaround from the Nirav Modi scam, said Mehta.
The recovery helped in the turnaround of the bank. The second factor was reducing slippages. “We had slippages of Rs 5,250 crore in the first quarter. We reduced slippages in the second quarter by Rs 4,470 crore. In the third quarter, we reduced slippages to Rs 3,200 crore,” said Mehta.
Reducing slippages helped the bank to reduce provisioning. “Reduced slippages and increased recovery helped us to absorb losses. We don’t have any pending provisioning now. We have done 100 percent provisioning of the Nirav Modi scam in the third quarter,” he said.
On beleaguered liquor tycoon Vijay Mallya, Mehta said bringing him back is a symbolic attempt. “PNB has already taken legal action to recover his assets. When the decision comes, it hopes to get good recoveries,” he said.
On IL&FS exposure, Mehta said PNB has an exposure of Rs 2,000 crore which is not big (looking the size of the bank).
“Our exposure is mostly in individual SPVs, not in the main company of IL&FS. The good thing is that most of SPVs have independent cash flows. We expect that we don’t have to face big challenges. We had set aside Rs 331 crore as non-performing assets (NPAs) which is factored in the current quarter.”
On 12 percent MUDRA loans becoming NPAs, Mehta said the government has made a trust fund which gives the guarantee to banks. “If a MUDRA loan becomes NPA, we get it from the trust fund,” he said.
“We have gross NPAs of 12 percent on MUDRA loans which is below the gross NPAs of the banking sector. So we don’t see any big challenge. The government has already given a guarantee to our MUDRA loans, so we are secure.”
Under the Insolvency and Bankruptcy Code (IBC), PNB’s performance is very good, Mehta said. “We had recovered Rs 3,000 crore in the first quarter and Rs 800 crore in the second quarter. We don’t want to name but we have big accounts in the fourth quarter. We expect very good recoveries.”
On expectation from the RBI credit policy to be announced on February 7, Mehta said he expects no change in interest rates.