Indo-Gangetic belt on radar, says PNB chief

Punjab National Bank (PNB) is looking at positioning itself as a strong player in the Indo-Gangetic belt, with major thrust on financial inclusion.

Dr K C Chakrabarty, the recently elected chairman and managing director of the bank, said, "The next growth wave will happen in the Indo-Gangetic belt, given the high demographic dividend from the region." Of the 4,500 PNB branches, 60-70 per cent is in the Indo-Gangetic belt.

"Regional rural banks (RRBs) will be the major vehicles to undertake financial inclusion initiatives. Currently, our SHG (self-help group) exposure is around Rs 300 crore and has benefited 30,000 SHGs. We intend to take this figure to 1,00,000 and maybe, the exposure would be around Rs 1,000 crore," Chakrabarty said. He did not give a timeframe to achieve the target.

Outlining the major challenges in implementing financial inclusion, he said most SHGs are formed by women. In northern India, they are still "looked down upon by the semi-upper caste sections", which calls for attracting SHGs from the lower strata of society.

"Organising them in groups is a very difficult task. It will take time but it has to happen," Chakrabarty explained.

Emphasizing the importance of technology for initiating financial inclusion, he said the bank had already spent Rs 600-700 crore on technological initiatives, and has set aside another Rs 300 crore to be invested over the next three years.

In order to enable the bank's financial inclusion initiatives, 1,00,000 terminals will be installed, which will be linked to the CBS (core banking solutions) network of the bank.

The bank already has 20,000-25,000 terminals on its CBS network.

When queried about the restructuring plans of the bank's subsidiary PNB Gilts, he said such a decision would be taken in the next 3-6 months.

"We will either merge or restructure PNB Gilts. We may rope in a strategic partner and dilute some stake, which will help us raise capital too. The second option would be to take PNB Gilts onto the books of the bank," Chakrabarty said.

On PNB's proposed foray into life insurance with UK-based Principal Financial Group, Vijaya Bank and UK Paints (India), which has not yet taken off, owing to some of its partners weighing their exit options, Chakrabarty said the bank would "either strengthen or segregate". He said that PNB would take a decision on the JV in the next six months.

Chakrabarty was in Chennai to donate Rs 50 lakh to the Madras School of Economics towards augmenting the infrastructure at the institute.