Punjab National Bank (PNB), one of the largest public sector banks in India, is back in green with spectacular performance in last quarter. It recovered Rs 4,000 crores in the March quarter of FY 19. The bank expects to recover another Rs 3,100 crores in April to June quarter of this financial year through sale of non-core assets. In the first nine months of previous fiscal year, total recovery of PNB stood at 16,608 crore rupees. Therefore, the total recovery by the bank stood at more than Rs 20,000 crores for the previous fiscal year.
The bank has a stressed balance sheet due to Rs 14,356 crore Nirav Modi scam. However, since then, PNB has performed very well and posted Rs 246.51 crore profit in December quarter of last fiscal year. The public sector bank is yet to release the result of last fiscal year.
PNB is one of the largest and oldest banks in India. Its history goes back to the independence movement and the Swadeshi movement in the country. The bank was registered in 1894 in Lahore by Swadeshi movement leaders such as Dyal Singh Majithia, Lala Harkishen Lal, Lala Lalchand, Kali Prosanna Roy, E. C. Jessawala, Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan Dass. It has the distinction of being the first bank that started exclusively on the Indian capital that has survived till date. Revered nationalist leader Lala Lajpat Rai was closely associated with the management of the bank in the early years. The bank also maintained the account of the Jallianwala Bagh Committee.
The magnificent recovery was primarily due to two reasons. The first being Insolvency and Bankruptcy Code (IBC) and second is the efforts by bank management to recover loans. The bank deployed as many as 3,000 employees to recover the defaulted amount because it did not wanted to make into RBI’s watch list. The resolution of some cases through IBC came as god’s gift to PNB. It recovered Rs 3,081 crore when Tata Steel acquired debt laden Bhushan Steel through IBC process. Another big profile case solved through IBC was Anil Agrawal led Vedanta resources taking over Electrosteel Steels for an aggregate amount of Rs 1,805 crore (USD 275.7 million) and additional funds of Rs 3,515 crore (USD 536.9 million) by way of debt. In the Electrosteel steel case PNB got Rs 335 crore and in another Monnet Ispat case it got Rs 110 crore, this was also solved through IBC.
The recovery of PNB was not limited to IBC process. It solved many cases on its own through one time settlements. It got Rs 107 crore from Siddhi Ispat, Rs 84 crore from GTL and Rs 52 crore from Indo Rama Synthetics through one time settlements. The next big resolution through IBC could be Bhushan Power and Steel (different from Bhushan Steel) for which National Company Law Tribunal (NCLT) will hear eligibility of bids on September 24th. The performance of PNB among all PSBs in NPA recovery was excellent; it alone was responsible for almost a quarter of NPA recover in the last fiscal year.
PNB could save its legacy of more than a century’s history if its performance is good in upcoming years. Otherwise Modi government is quite dedicated to privatize ill performing public sector units as it does not want taxpayer’s money to be wasted on luxuries of employees of these banks.