How PNB recovered from biggest bank fraud to top spot in ‘reform agenda’ in just 9 months

By: | Published: March 1, 2019 2:48 PM

Punjab National Bank (PNB), even after being hit by the Rs 12,000-crore fraud, has been able to recover swiftly, securing first rank with a score of 78.4 out of 100 in the EASE Reforms Index, said the BCG-IBA report.

India’s second-largest state-run lender Punjab National Bank has emerged as the top performer in an index measuring reforms at PSUs, in just nine months after being hit by India’s biggest bank fraud — Nirav Modi loan case.

PSU banks in India have shown significant improvement and achievement in many areas across the six themes of the EASE Reforms Index, prompting Finance Minister Arun Jaitley to say: “The worst in banking system is now behind us.”

Arun Jaitley lauded the effectiveness of government’s 4R’s (Recognition, Recapitalisation, Resolution, and Reform) strategy. Insolvency and Bankruptcy Code (IBC) has brought back close to Rs 3 lakh crore back into the banking sector and the NPAs are going down, he said at the release of the first report on EASE Reforms Index in Delhi.

Punjab National Bank (PNB), even after being hit by the Rs 12,000-crore fraud, has been able to recover swiftly, securing first rank with a score of 78.4 out of 100 in the EASE Reforms Index, said the BCG-IBA report. It is followed by Bank of Baroda (77.8), State Bank of India (74.6), Oriental Bank of Commerce (69), Canara Bank (67.5) and Syndicate Bank (67.1).

The BCG-IBA report — EASE (Enhanced Access & Service Excellence) Reforms for Public Sector Banks — measures performance of each PSU bank on 140 objective metrics across six themes and provides all PSU banks a comparative evaluation showing where banks stand vis-à-vis benchmarks and peers on the Reforms Agenda.

How PNB rose from shambles to the top:

Acknowledging the success of PNB, Arun Jaitley said: “The bank, which suffered both in terms of finance and transiently, in terms of reputation because of a fraud practice and in 9 months had to set aside Rs 14,000 crore for bad assets, rapidly transformed itself into an evolving institution and after a period of 9 months in last quarter declared a profit. It then emerged as the best performing bank.”

PNB has performed quite well in the parameters like customer responsiveness, responsible banking, credit off-take and financial inclusion, according to the report.

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The bank’s net profit increased by 7.12 per cent at Rs 246.51 crore for its third quarter ended December 31, 2018, due to lower provisioning for bad loans. Its net NPAs fell to 8.22 per cent from 8.90 per cent at the end of December 2017, PNB said in a BSE filing.

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