Home / Industry / Banking /  Up to 6% of PNB’s loan book may be recast

NEW DELHI : State-owned Punjab National Bank (PNB) Monday said about 5-6% of its loan book may be eligible for a one-time debt restructuring. The bank hopes to get a clearer picture by September end, when guidelines from the K.V. Kamath committee on debt recast are expected to be released.

The country’s second-largest public sector lender on Friday announced a net profit of 308 crore for the June quarter, against 1,018 crore a year ago. In the March quarter, the bank had posted a net loss of 697.20 crore. Total income during the quarter stood at 24,292 crore, against 15,161 crore a year ago. Capital adequacy ratio under Basel III norms stood at 12.63% compared to 9.77% a year earlier.

PNB expects good credit growth from micro, small and medium enterprises, as well as retail customers in the rest of the current financial year, managing director and chief executive officer S.S. Mallikarjuna Rao said in a post-earnings virtual briefing on Monday. “As far as (demand from) corporates are concerned, it will depend on new investment. Today, bankers have liquidity and are ready to invest if opportunities arise. The situation may change from October onwards, barring sectors such as tourism and aviation that may take longer to come back. Investments are expected to happen in the road sector. We can also see some industries enhancing their capacity utilization where additional funding would be required. There could be demand from the automobile and textile sector," he said.

Last week, Reserve Bank of India governor Shaktikanta Das said in a television interview that a resolution framework for all covid-19 related stressed accounts will be finalized by 6 September. Earlier this month, the central bank said banks will be allowed to restructure some loans to support economic recovery and help businesses survive the coronavirus crisis. The Kamath panel is working on eligibility parameters to recast stressed loans.

PNB had a domestic loan book of 7.21 trillion in the June quarter. So the bank expects loans worth 36,000-38,000 crore to avail the restructuring window provided by RBI. Rao said the bank aims to have a credit growth of 4-6% in the current fiscal year.

PNB also plans to raise funds through a qualified institutional placement (QIP) by the end of the December quarter or during January-March.

“If you look at from the Basel III requirements, in terms of regulatory guidelines, we are adequately capitalized. In order to see that the impact of covid, if it is there, and the next few years to consider the growth capital, we have already taken the approval from the board for taking roughly around 14,000 crore. The 14,000 crore comprises 7,000 crore for equity, 3,000 crore for tier 2 bonds... We are very confident of going to the market; probably by end of Q2-Q3 will be working on it. In terms of the QIP, we have been looking at somewhere at the end of Q3 or during Q4," Rao said.

The government infused 16,091 crore capital in PNB during 2019-20 and 5,908 crore in 2018-19. As a result, the government holding in the bank post September rose to 83.19%, from 75.41% at the end of March 2019.

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