Min balance fine removal may benefit PNB in long run: MD Ashok Chandra

Our domestic NIM currently stands at 2.84 per cent. Including our overseas portfolio of Rs 55,000 crore, the global NIM is around 2.70 per cent, says Chandra

Punjab National Bank (PNB) -- which did not disburse any credit to startups in the financial year 2024-25 (FY25)-- has now set up seven startup-focused centres across the country to boost lending, its Managing Director and Chief Executive Officer Ashok Chandra said in an interview with Harsh Kumar at PNB headquarters. Chandra also said the state-owned lender plans to list its subsidiary, Canara HSBC Life Insurance, by the third quarter of FY26 and will dilute 10 per cent of its current 23 per cent stake. Edited excerpts:

 

How do you view the potential impact of the 25 per cent tariff imposed by the US, particularly on Indian industry?

 

I see this from a different angle. If you look at countries that are facing these tariffs, 35 per cent in textiles for example, it gives Indian exporters a competitive edge. This could help us scale up, expand our market presence, and penetrate new markets more effectively. For now, we are studying our portfolio to assess how many of our borrowers are exporters and how they may be impacted. It’s too early to say definitively, as more clarity is needed. But overall, I view this as a growth opportunity for India, as competing countries are now subject to higher tariffs.

 

PNB has recently removed the penalty on not maintaining a minimum balance in savings accounts. Will this impact your bank’s income?

 

The income from minimum balance penalty was around ₹300 crore annually, which isn’t significant for a bank of our size. We’ll make up for it through other revenue-generating activities. In fact, this move could lead to an increase in the number of savings accounts. So, in an indirect way, it could be beneficial for us in the long run.

 

Why PNB didn’t extend loan to the startup sector in FY25. What was the reason?

 

Earlier, we didn’t have a robust policy or dedicated infrastructure for startups. But in the current financial year, we’ve created seven startup-focused centres across the country. We’ve also introduced a new, more liberal credit policy tailored for startups, and already begun lending, some disbursements have happened this very quarter. Secondly, we lacked partnerships with incubation centres, especially at India Institute of Technologies, unlike some of our peers. But that is changing. We’re now in discussions with IIT Mumbai, Delhi, Chennai, and Kanpur to tie up with their incubation centres. These are places where many promising startups emerge, and we plan to sign MOUs to support them from the incubation stage itself. This year, you’ll definitely see PNB becoming more aggressive in the startup funding space. 

 

RBI has changed the repo rate in recent two monetary policies. How is that impacting your strategy, especially on NIMs (net interest margins)?

 

Our domestic NIM currently stands at 2.84 per cent. Including our overseas portfolio of ₹55,000 crore, the global NIM is around 2.70 per cent. About 47 per cent of our loan book is linked to the repo rate, and we immediately pass on any changes to these RLLR (Repo Linked Loan or Lending Rate) linked accounts. For example, if there’s a 100 basis point repo cut, it reflects in our lending the next working day. Despite that, we’ve managed to keep our interest income steady. From March to June, the dip was just ₹100 crore, and year-on-year we’ve actually seen 1 per cent growth.

 

Are you planning anything with your non-core assets, such as subsidiaries or associates?

 

Yes, the only associate we are currently working on listing is Canara HSBC Life, where we hold a 23 per cent stake. We’re planning to dilute 10 per cent of that. The listing is expected to happen by Q3 of this financial year. Our other subsidiaries are also doing well, PNB Housing and PNB MetLife. There’s a clear focus on maximising value through either listing or internal strengthening.

 

How are you dealing with inoperative accounts of Pradhan Mantri Jan-Dhan Yojana?

 

There’s no directive to forcibly close accounts. But if someone has opened multiple accounts and has not operated them in 5-6 years, there’s no point in retaining such dormant accounts. We are identifying such accounts and conducting a system-wide clean up. Yes, saturation is a factor. The pace of new account openings is naturally slowing down because most eligible people already have accounts. But we are encouraging conversion of these accounts into general savings accounts, which now come with more features.

 

In our last interaction, you mentioned deploying digital tools to improve customer service. What kind of response are you seeing?

 

We have received over 50,000 feedback entries through the QR codes displayed at branches. All of this data is monitored at the head office. When we analysed the responses, 97 per cent were rated as “Good” or “Very Good.” The remaining 2-3 per cent helped us identify areas that need attention. Since the feedback is anonymous and real-time, it allows us to pinpoint the exact geography and type of issue immediately. This helps us resolve problems proactively.