May not need to move NCLT over MTNL loan account: PNB MD, CEO Ashok Chandra

Punjab National Bank (PNB) expects clarity on Mahanagar Telephone Nigam Limited (MTNL) loan account in the next two months, said Managing Director and Chief Executive Officer Ashok Chandra in a video interview with Harsh Kumar. The state-owned lender on Friday reported a 102.8 per cent year-on-year increase in net profit at Rs 4,508 crore for Q3FY25. Edited excerpts:

 

Why is PNB not going to the tribunal in the case of MTNL since the account is a non- performing asset?

 

Since this is a government account, there will be some good resolution in this particular (MTNL loans) account. Maybe by the end of March, there will be some visibility. Already some committees have been formed at the top level and discussions are happening. I don't see any major challenge with this account and may not need to go to the NCLT.

 

What is your recovery outlook for this year? 

In the nine-month period, we have achieved a recovery of Rs 11,500 crore. Breaking down these recoveries, approximately  Rs 4,400 crore came from the corporate book, Rs 3,100 crore from the agreement segment, Rs 2,500 crore from other sectors, and Rs 1,500 crore from retail. The majority of our recoveries have come from the corporate book.

Looking ahead, we anticipate that the corporate book will continue to play a significant role in our recovery efforts. For the upcoming fourth quarter, we expect the overall recovery to fall in the range of Rs 5,000 to Rs 6,000 crore.

 

Are deposits still a challenge? 

I believe that deposits are currently a challenge, especially with the availability of higher interest rates. While one can attract deposits during such times, we need to adopt a different strategy for mobilising them. In the Current Account Savings Account (Casa) segment, particularly in the savings account segment, interest rates alone are not enough to draw in deposits. We need to enhance our offerings by providing unique features for each product. A one-size-fits-all approach for vanilla products is no longer effective in savings. What we require are sector-specific savings products tailored to different groups, such as salaried and non-salaried classes, as well as special products for senior citizens.

 

We will closely monitor how our existing products perform and identify areas for improvement. An action plan will be developed to refine our offerings. Our goal is to regain the market share that PNB once held, which was around 46 per cent in Casa deposits. Last year, our Casa ratio was 42 per cent, and it has decreased to 36 per cent.

 

The Economy Survey has mentioned that banks need to enhance capabilities to meet demands of new-age households. Your thoughts? 

Over the past three years, we have witnessed significant improvements across the banking sector, both in terms of growth and profitability. Banks are currently in a strong position. However, we face a challenge: we must avoid complacency. It’s crucial that we do not slip back into the cycles we experienced in 2013-2014. Recent economic surveys indicate that while this is a favorable time, we must remain cautious and mindful of our exposures. It’s important that we understand and deliberate on the decisions we make during this period.

 

Why are the number of Pradhan Mantri Jan-Dhan Yojana accounts high? 

We currently have approximately 1.98 crore operative accounts. To enhance the engagement, we have initiated several steps and recognise the need for substantial efforts at the field level to connect with our customers. We are actively involving business correspondents to help activate these accounts, particularly since they are located within specific localities rather than distant areas. It’s essential to focus on ground-level activities to stimulate engagement, utilising our network of 32,000 business correspondents effectively.