Punjab National Bank (PNB) is looking to recover Rs 32,000 crore worth of bad loans and reduce its net NPA ratio to 3.5% by the end of this fiscal, managing director and CEO Atul Kumar Goel said.

The recovery in each quarter would be higher than the slippage. While the bank recovered Rs 7,057 crore in the fiscal first quarter ended June, slippages were at Rs 6,468 crore during this period.

“During the remaining part of the fiscal, we expect to recover Rs 8,000-9,000 crore every quarter. This will include Rs 6,506 crore from cases before the NCLT (National Company Law tribunal). The recoveries would be higher than the fresh slippages,” said Goel.

For achieving the loan recovery target, PNB has set up a team of about 300 officials to monitor all non-performing asset (NPA) accounts. The team will be monitoring all accounts including those on which Sarfaesi or NCLT proceedings are underway, Goel said.

The bank’s net NPAs fell to 4.28% in the June quarter from 5.84% a year earlier and 4.8% in the March quarter. In value terms, net NPAs fell to Rs 31,744 crore as of June-end, from 38,581 crore a year ago. Gross NPAs reduced to 11.27% (Rs 90,167 crore) from 14.33% (Rs 1.04 trillion) a year ago.

PNB has identified eight accounts and will transfer Rs 2,486 crore worth of bad loans to the National Asset Reconstruction Company Ltd (NARCL). All banks are expected to transfer bad loans worth Rs 50,000 crore to NARCL by September, said Goel, who is also chairman of the Indian Banks Association (IBA).

The state-owned bank reported a 70% drop in standalone net profit to Rs 308.44 crore in the June quarter on the back of dip in treasury income and higher provisioning for bad loans. The bank suffered mark-to-market (MTM) losses of Rs 1,409 crore in Q1 amid rise in bond yields, as against a reversal of MTM of about Rs 301 crore a year ago.

Treasury profit dropped from Rs 1,118 crore in June 2021 quarter to Rs 573 crore in April-June 2022.

 The bank’s gross advances grew 10.21% year-on-year to Rs 8,00,177 crore for the quarter ended 30 June 2022. The retail advances of the bank grew 10.77% to Rs 1,46,321 crore. “We would like to keep our retail assets at 46% and corporate at 54% of the total advances,” Goel said.

 PNB is targeting a credit growth of 10-11% this fiscal, led by retail assets. The bank has a sanctioned pipeline of Rs 1.4 lakh crore and it will look at lending to non-banking financial companies (NBFCs) in a big way, Goel said.

 Low-cost CASA (current account savings account) deposits was 46.34% of the bank’s total deposits, growing 119 basis points over the previous year. The savings deposits of the bank grew 6.61% over the previous year to Rs 4,47,258 crore. “We have brought down our bulk deposits and will focus on ramping up the CASA further,” Goel said.

 On interest rates, Goel said he expects both deposit and lending rates could increase by 40-50 basis points by March 2023.

With regard to capital, he said the board has approved capital raising of Rs 12,000 crore. Out of the total amount, Rs 5,500 crore would be for AT1 and the remaining Rs 6,500 crore for Tier-2 capital.

The bank has a capital adequacy of 14.80% as against the regulatory requirement of 11.5%.

PNB has no plan to sell its stake in PNB Housing Finance and would instead invest Rs 500 crore in the rights issue of the housing finance subsidiary to meet regulatory norms, Goel said. The norms stipulate that PNB has to maintain its stake in PNB Housing at more than l26% but less than 30%.