As bad loan crisis has gripped almost all public sector banks (PSBs), country’s second-largest PSB Punjab National Bank (PNB) on Wednesday reported record high quarterly loss at Rs5,367 crore in provisioning for bad loans for the fourth quarter ended March 31.
“We have done Asset Quality Review (AQR) fully. The bank has provided Rs11,380 crore for bad loans during the quarter including Rs 385 crore for discoms,” PNB Managing Director Usha Ananthasubramanian told reporters here.
The bank is of view that what is worrying the bank is a three-fold surge in provisioning for bad loans, including for power discoms and Punjab foodgrain related loans - the main cause for bad performance of the bank. “We expect the pain to continue for some more time. Besides, the bank has made provision of Rs167 crore for losses on Punjab foodgrain related loans,” Ananthasubramanian added.
As part of fight against NPAs, the PNB chief said that the bank sold Rs1,832 crore bad loans to asset reconstruction companies (ARCs). “The bank will be selling assets to ARCs during the current fiscal also but will be difficult to give the number,” she said, adding that intensification of e-auction drive or exploring possibilities in each stressed account is yielding result.
When asked about liquor baron Vijay Mallya’s offer of part payment of bank loans, she said, “He must pay the full amount and settle the dues. Although we are not leader of the consortium, we want he should pay full.”
PNB had an exposure of Rs800 crore to the Mallya-promoted Kingfisher Airlines, which had to close shop under huge debt burden and payment defaults.
On capital raising, she said, “The bank would be seeking funds from the Government this year as well. Bank is ready to shore up capital at an opportune time and option is available through Additional Tier 1 and Tier 2 bonds. Besides, the bank is also considering for selling some of its non-core business. It will sell its holding from some its non-core business in the coming months.”
As far quarterly performance is concerned, the bank had a net profit of Rs306.56 crore in the corresponding period of 2014-15. Provision for bad loans or non performing assets (NPAs) rose more than three-fold to Rs11,380 crore in the fourth quarter as compared to Rs3,281 crore in the same period a year ago.
Net interest margin of the bank declined to 2.95 per cent in 2015-16, from 3.55 per cent. Provisions for bad loans during the entire fiscal more than doubled to Rs18,469 crore, compared to Rs7979 crore in the previous fiscal. Fresh slippages during the year rose to Rs41,060 crore as against Rs15,692 crore in the previous fiscal.