Punjab National Bank (PNB) plans to cut the time taken to clear a decision of the joint lenders’ forum (JLF) by dividing loans into two categories – one where it is the lead bank and in other where it is not, newly-appointed MD & CEO Sunil Mehta said. “In accounts where we are just a member of the consortium, we do not have a decision making authority since we will have to fall in line with whatever decision is made by majority of the members,” he said, adding that in accounts where the bank is the majority lender, it will actively work with other lenders to quickly resolve the stress. According to Mehta, JLF meetings are mostly attended by junior-level officers who do not have the right to take a decision on the bank’s behalf. “When they (junior officers) go back to their offices, they are told that it cannot be agreed upon,” he said, adding that it delays the decision making process.
“To prevent it, as a leader, we will first analyse it at a grassroots level and immediately call a meeting of senior officials with a proper mandate and discuss it among ourselves and then call the borrower,” Mehta said. He added that the bank plans to take a collective decision to resolve stress in such accounts so that the time lag between the first JLF and the final decision is reduced. With a view to facilitating consensus, the RBI lowered the threshold needed for implementing a corrective action plan (CAP) — decisions agreed to by a minimum of 60% of creditors by value and 50% of creditors by number will now be valid. Earlier, 75% of the lenders by value and 60% by number were needed to sign off on a CAP.
Once a decision is taken, the RBI said, it would be binding on all the others and must be implemented without any additional conditionality. If a lender wants to exit, it can do so by resorting to the substitution option. But if it fails to exit within the given time, it would need to go along with the decision taken. The asset quality at PNB improved in the March quarter, with its gross non-performing assets (NPAs) as a percentage of total advances standing at 12.53%, down 117 bps sequentially. Its net NPAs stood at 7.81%, down 28 bps sequentially. PNB’s cash recoveries and upgrade in the March quarter stood at Rs 10,677 crore and Rs 2,981 crore, respectively.