PNB expects Rs 3,000-crore recoveries in March quarter

The bank currently has fund-based accounts worth Rs1,200 crore and non fund-based accounts worth Rs2,500 crore on its watch list.

Written by FE Bureau

February 8, 2020 04:19 IST

PNB, SS Mallikarjuna Rao, Aircel Group entities, Oriental Bank of Commerce, Bhushan Power & Steel, LIC

With the finance ministry signalling that some banks may have to raise additional funding from the capital markets, PNB’s management said the bank may approach the market during the third quarter of the next financial year.

Punjab National Bank is looking to raise money from the markets in Q3 FY21, SS Mallikarjuna Rao, MD and CEO, PNB said on Friday, even as the public sector lender is expecting the recoveries worth Rs 3,000 crore during January-March 2020.

After a surprising Rs 492-crore net loss in the December, 2019 quarter, the bank is expecting around Rs3,000 crore in recoveries in Q4FY20. The resolution of Rs8,000-crore worth of accounts, including Bhushan Power & Steel and Aircel Group entities, is expected to be completed in the March quarter, Rao said.

The bank expects a write-back on around 1,400 accounts in the March quarter. “Aircel resolution is expected to fetch Rs2,300 crore, and Bhushan Power – around Rs3,700 crore… What money we are expecting is only Rs3,000 crore, and we have already provided for around Rs6,000 crore,” Mallikarjuna told reporters.

The bank currently has fund-based accounts worth Rs1,200 crore and non fund-based accounts worth Rs2,500 crore on its watch list. Few of these advances, one in the textile sector and another in the roads sector, have already become non-performing, the management said.It has also made higher provisions for accounts in sectors including telecom, aviation
and energy.

The third largest public sector bank expects credit growth at 8-10% in FY20, according to the management. Following its merger with Oriental Bank of Commerce and Union Bank of India, PNB will also function as a fully integrated entity from April 1. With the finance ministry signalling that some banks may have to raise additional funding from the capital markets, PNB’s management said the bank may approach the market during the third quarter of the next financial year.

“The government holds 83% currently in PNB alone, now, if there are no shares held by the public, how will my (share) price go up? Who will sell?… LIC (which holds about 9%) will not sell. Where is the corpus for sale and purchase? So, it is a very ridiculous situation for us. We want a situation where it is vibrantly traded,” Mallikarjuna said, adding that the bank will either approach the market for a Qualified Institutional Placement (QIP) or a Follow-on Public Offer (FPO).

This article was first uploaded on February eight, twenty twenty, at nineteen minutes past four in the morning.