1. PNB not to lend to iron & steel sector till it recovers

PNB not to lend to iron & steel sector till it recovers

Taking a cue from high delinquencies in the iron and steel sector, state-owned lender Punjab National Bank (PNB) has decided to refrain from lending to the sector till it recovers from the downturn, managing director and CEO Usha Ananthasubramanian said on Tuesday.

By: | Mumbai | Published: May 25, 2016 7:43 AM
punjab national bank Taking a cue from high delinquencies in the iron and steel sector, state-owned lender Punjab National Bank (PNB) has decided to refrain from lending to the sector till it recovers from the downturn, managing director and CEO Usha Ananthasubramanian said on Tuesday.

Taking a cue from high delinquencies in the iron and steel sector, state-owned lender Punjab National Bank (PNB) has decided to refrain from lending to the sector till it recovers from the downturn, managing director and CEO Usha Ananthasubramanian said on Tuesday.

Speaking to reporters in Mumbai, Ananthasubramanian said the bank has been ‘bitten’ by the steel sector. “Certainly when any new project comes, you will shy away irrespective of the promoter. There are certain area, certain industries which you may have to shut shop to or not be any active player,” she said.

She added that in some sectors, the bank has huge exposure that will certainly be pruned. “Earlier, the names would have been an attract. But today since we are bitten, we are in the process of having high collateralised or good quality proposals. It is not that four banks are there so let us be there, or we will be there and we will pull four banks,” Ananthasubramanian explained.

“There is a conscious decision on selection of proposals and on processing of proposals along with upskillng of capabilities. We would keep away from wherever we are bitten until that sector turns around,” Ananthasubramanian said.

Earlier last week, PNB had posted the worst-ever quarterly loss in India’s banking history after over R15,000 crore of restructured loans slipped into the NPA category in the March quarter following the central bank’s asset quality review (AQR). Had it not been for a tax write back of R1,890 crore, the quarter’s loss would have been more than the R5,367 crore declared.

PNB’s SMA -2 accounts — repayment overdue between 60 and 90 days — stand at R11,000 crore, but the bank said it expects strong recovery of R15,000-20,000 crore in FY17.

Provisioning rose from R3,800 crore a year ago to R10,500 crore in the March quarter. In Q4, the bank has also provided R166.36 crore or 7.5% of the existing loans of R2,218 crore under food credit availed by the Punjab government.

As per RBI’s directive, the provision is required to be made in two quarters – 7.5% in March and 7.5% in June.

During the year, PNB revalued immovable properties by forming a revaluation surplus of R1,478 crore which has been credited to revaluation reserve.

Seven heavily stressed sectors including steel, infrastructure, textiles and cement contributed more than 55% of GNPAs of the bank. Iron and steel alone contributed 25%.

PNB’s net interest margin fell by 76 bps to 2.03% in the March quarter against the year-ago period. The bank’s net interest income — the difference between interest earned and interest expended — fell 27% Y-o-Y to R2,768 crore.

Get latest news and updates on Auto Expo 2018, check breaking news on Budget 2018, like us on Facebook and follow us on Twitter.

  1. No Comments.

Go to Top