In an interview, Punjab National Bank MD & CEO Ashok Chandra tells Manju AB about the bank’s FCNR(B) plans, drive to grow deposits and plans to enter the wealth business.
Is the target of garnering $2.5 billion in FCNR(B) deposits too ambitious, despite PNB being one of the early movers in the game?
We are an agile organisation and have a good non-resident Indian (NRI) customer base. We are engaging in various activities to reach out to them through social media, WhatsApp, and emails. We have also planned specific outreach programmes. NRIs are showing a lot of interest on these deposits, and we are confident of achieving our target of $2 billion to $2.5 billion.
Some banks are offering customers a leverage to borrow higher than 9 times their own funds to create FCNR (B) deposits. Is PNB looking to join this race?
We are offering a leverage of 9x and don’t intend to go above this. There will be various levels of leverage and it will depend on the relationship with the customer. But even with a 9x leverage, the customers are able to get good returns.
Isn’t the pace too slow as the bank has collected $425 million so far through this route?
Things are moving and it is a matter of time before large volumes will start moving in. Not only for us but for all the banks in the country. We are advising the NRIs on how beneficial these schemes are for them, and they have the budgets to invest.
How do you plan to deploy these funds?
We believe that the RBI’s swap facility will help us get good rupee deposits and it will add to liquidity. We will be able to retire our high-cost deposits. Systematically, we have started retiring CDs (certificate of deposits) which are getting matured. So, we are not going to be there in the market to raise bulk deposits. The FCNR(B) deposits will supplement all our high-cost deposits.
Besides, the RBI has lifted the SLR (statutory liquidity ratio) and CRR (cash reserve ratio) requirements on these deposits. This makes such deposits very cost effective.
Low-cost CASA (current account savings account) growth has been a big problem area for banks. How are you tackling this?
There are two components to this. The bank is doing well in the current account area and we have posted a 17% year-on-year growth in this quarter. Individual saving account balance is also growing well. The challenge which we have is the institutional deposits.
What other lines of new business are you looking at?
We will launch our wealth management services by the third quarter of the current financial year.
PNB has brought down its non-performing assets over a period of time. How has this been achieved?
I will highlight the asset quality and underwriting standards, which have improved. In the six-year period beginning July 1, 2020, we have sanctioned loans worth around Rs 14.74 lakh crore, out of which the disbursed amount is Rs 12.92 lakh crore. The outstanding in these loans is Rs 8.94 lakh crore, which is close to 70% of our total outstanding loan book. The NPA in this book is hardly Rs 5,486 crore, which is only 0.42% of the disbursed amount under fresh underwriting. This speaks a lot about the credit underwriting standards of our bank.
Has PNB managed to get a young customer base?
About 57% of our customer base is below 40 years of age. That is why we are introducing many digital products. Our digital sanctions have also gone up substantially.
