Punjab National Bank (PNB), one of India’s largest public sector banks, recorded a 52% year-on-year (YoY) jump in net profit to ₹4,567 crore, up from ₹3,010 crore in the same period last year. In addition to its financial achievements, PNB confirmed its commitment to national service by ensuring uninterrupted banking operations in conflict-affected areas during Operation Sindoor, says PNB, executive director, Kalyan Kumar in an interview with Outlook Business. As confirmed by the bank, contingency measures were taken to maintain access to critical banking services in times of crisis.
Edited excerpts from the interview:
Punjab National Bank eyes $1.96 bn bad loan recovery in FY25. How much of this has been recovered so far? Give us an idea of which portfolios turned into bad loans and which ones have been recovered?
Last year our target of recovery was ₹18,000 crores and the bank was to recover approximately ₹14,336 crores. As we expected some larger recoveries from major accounts, we missed the guidance provided to the market. However, I can share that the major recoveries exceeding ₹100 crore totalled ₹3,700 crore in FY25. PNB effectively controls slippages, and our recovery is two twice the amount of slippages. In this way, we are controlling PNB's net NPA [non-performing assets] effectively. This time for recovery, we are giving guidance of ₹16,000 crores, which I am hopeful that PNB will be able to achieve. Because in gross NPA, we have more than ₹40,000 crore QP. And on the other hand, we have more than ₹90,000 crore QP.
Still, we have a lot of amounts to be recovered, bad debt to be recovered. Within that, I believe the ₹16,000 crore recovery guidance we have given to the market, will be easily met. With systems improvement and technological advancements, we are leveraging the technological capabilities which we have developed. I am confident that this will not be a major challenge for PNB.
How does the RBI’s repo rate cut impact your deposit growth strategy?
There was a cut of 50 basis points and we immediately passed on the benefits to our customers with repo-linked advances. However, deposit repricing happens with a lag as deposits are contractual liabilities that reprice only upon maturity. Because of this delay, a rate cut does not immediately affect the deposit side, so we do not feel threatened by a possible reduction in deposit inflows.
Our deposit growth last year stood at 21%. Notably, more than 60% of our total deposits come from retail customers, which provides a strong and stable base.
Another important area we have done for deposit mobilisation is our current account product, which we have revisited and customised for the different segments of corporate customers, even mid-segment customers or smaller businessman customers. For savings accounts also, the number of products we have again revisited with bundled benefits for the different segments of customers, like salaried customers, institutions, doctors, farmers, housewives, and pensioners; for different segments, we have created customised products.
Considering the war situation, has the bank taken specific measures for banking near the border areas?
We have given guidance to our field functionaries to keep ATMs full of cash and also to ensure that these services are uninterrupted and available to our citizens in those affected areas. Simultaneously, we have also taken care of their family members so that they can shift to safer places. But banking services are available there with all the ease and convenience to the customers of those localities. Our dedicated call centres are already there. Our branches are open in those areas, even in the affected areas also. That is a touchpoint for those customers.
Has the repo rate cut led to a sharp rise in credit demand or changed borrower behaviour?
Yes, with the repo rate coming down, Punjab National Bank—having nearly 44% of its loan book linked to the repo rate—ensures that any rate reduction is immediately passed on to our customers. This makes loans more affordable, especially for those under external benchmark-linked or repo-linked frameworks.
However, if I speak honestly about our experience in the previous financial year, we didn’t witness a dramatic or exponential growth in credit demand solely due to the lower interest rates. The response was more muted than expected.
That said, we're optimistic going forward. The recent Union Budget has provided a significant boost to disposable income, particularly with the increase in the income tax exemption limit to ₹12 lakh. This leaves more money in people’s hands and we anticipate stronger demand across retail segments—especially in personal loans, housing finance and consumption-driven credit.
On the MSME [micro, small and medium enterprises] front, the government introduces several supportive measures in the budget. These, combined with lower interest rates, are likely to enhance the viability and feasibility of loans in that sector. So, while last year didn’t show a major jump, we believe the conditions are now much more conducive to credit growth across both retail and MSME segments.
