With a focus on preventing slippages rather than pushing recoveries, Punjab National Bank (PNB) will try to restrict fresh bad loans at Rs 16,000-17,000 crore in FY18, down from Rs 22,000 crore in FY17, managing director and chief executive officer Sunil Mehta told analysts and reporters in Mumbai. The bank will raise Rs 3,000 crore in FY18 and will need no capital infusion from the government, he added. Edited excerpts: Tell us about your special loan syndication cell. The special loan syndication cell is a concept we have introduced recently after analysing the total market conditions. We are aware that six-seven banks have limitations in lending to existing customers because of the imposition of prompt corrective action by the Reserve Bank of India (RBI). Some of the banks have capital shortages also. Fortunately, PNB is better placed in these two areas. Banks which do not have capacity may still have good customers. So what we are targeting is, we are not trying to take over their business. We are going to meet the incremental requirement of their existing good customers.
Would you also be looking at advisory and syndication?
We have already started doing it. For example, there is a large infrastructure company for which we have taken a syndication mandate. We have underwritten it, sanctioned it and part of it we will downsell, the way some private banks have done so far. Whatsoever space had been vacated by the PSU banks and taken over by private banks, we are trying to reclaim it.
Are you also into debt recast services?
Wherever it is simply incremental requirement for credit, that will be taken care of by the syndication cell. Where it is a recast, we have our subsidiary PNB Investment Services taking it up.
What non-core assets are you planning to divest?
We have a large number of those and the valuation is substantial — around Rs 10,000 crore. We may offload stake in subsidiaries, but we have not identified anything yet. Even if we sell a small stake, we can get Rs 1,000 crore. We are adequately capitalised. We are trying to save it (non-core assets) for the next financial year so that even if something like a merger comes up, we are strong enough to absorb that.
How much is your non-core real estate valued at?
Our non-core real estate assets would be around Rs 1,200 crore, of which Rs 300 crore has already been identified for sale.
How much will you raise this year?
We have approval to raise Rs 3,000 crore of capital, and while raising it, we will take care of our existing shareholders and stakeholders. We have said we don’t need capital from the government.
What share of your book is linked to MCLR?
About Rs 1.4 lakh crore (35%) worth of loans are linked to MCLR.
Why has migration to MCLR been so low in the system?
To be honest, the average retail borrower is not very much sensitive to prices. They are more sensitive to customer service. As long as that is good, they don’t want too many changes.