'Enhanced monitoring has helped PNB reduce slippages and enhance recovery'

Atul Kumar Goel, managing director (MD) and chief executive officer (CEO) of Punjab National Bank (PNB), in an interview with Nikesh Singh, says that the bank is focusing on early warning signs in recognising stressed assets and is not compromising on the asset quality side in extending new loans. Edited excerpts:
 
Q. There were recent observations of the finance ministry for monitoring of large exposure in banks. What is PNB doing on that front?
The bank is tactful when extending loans to new corporate accounts. Every month, it is watching the manner in which the underwriting standards are working. The bank is not compromising on the asset quality side and is focusing on increasing the turnover. It is the impact of enhanced monitoring that slippages have come down to ~2,390 crore in Q1FY24. We are focused on recognising stressed assets through early warning signs and are also working on enhancing recovery in the coming quarters.
 
Q. The bank will raise ~7,000 crore through AT-1 bonds in FY24. When do you plan to raise it?
The capital adequacy of the bank is at 15.54 per cent as against the requirement of 11.5 per cent. There is no requirement on the capital front immediately. The bank is waiting for the favourable rate and may raise it in multiple tranches. It will take the decision keeping in mind that the cost does not go beyond a certain level. 

Q. When are you planning to implement the ECL (expected credit loss) based provisioning?

The RBI draft guidelines on ECL framework is out. It is about the issue of underwriting on how the book is behaving. The impact of the framework will be on the entire banking system. We are fully prepared to adopt the guidelines when they come. The current NPA of PNB won't hinder the ECL implementation.

Q.  Banks have been told by the finance ministry to focus on customer protection when outsourcing critical technology services. What is your take on that?

The bank exercises due diligence when they select the vendor for outsourcing critical services including technology services. PNB checks the financial parameters and market information of the vendor before finalising them. It also seeks information about the vendor from other banks with which the vendor has worked earlier and ensures customer protection while outsourcing.