Much in contrast to many, KC Chakraborty, chairman and managing director of Punjab National Bank believes that the time is not yet ripe for bank consolidation.
?Consolidation in an industry happens when there is proliferation of products and services. Still majority of the population are unbanked and unless we bring about financial inclusion consolidation will not come?, said Chakraborty.
Going ahead, the bank will focus on financial inclusion by introducing innovative delivery channels. Also, the plan is to implement full core banking solutions (CBS) by 2009, he said. As on June 30, 2007; 2557 branches out of 4177 domestic branches of the bank are operation on CBS platforms. The bank is also in the process of setting up data warehouse for meeting customer requirements and cross- selling of bank products.
PNB is currently undertaking repositioning of its subsidiaries viz. PNB Gilts Ltd and PNB Housing Finance Ltd. Among the options include restructuring subsidiaries, revamping business and even merging with the parent company, he said. Their business model has to undergo change, he said.
The bank has undertaken business process reengineering to move to mass banking from class banking, change in systems, structure, delivery channels. PNB has set a 18% target growth in deposit and 20% in credit portfolio by the end of the current financial year. To meet its capital requirements for the growth in its business, the bank has enough capital, he added. The capital to risk weighted assets ratio of the bank as on June 30, 2007 stood at 12.41%. Chakraborty added that the bank has headroom to raise Rs 1,500 crore in the tier II and another Rs 1000 crore tier I capital.
The net non-performing assets of the bank for the quarter ended June 30, 2007 was at Rs 926 crore (0.98% of the net credit) as against Rs 266 crore (0.35% of the net credit) in the same quarter a year ago.