The Financial year 2015 was a challenging year for Punjab National Bank. Amid the
challenges, your Bank made significant achievements and aligned its business strategy to
the macroeconomic scenario of the country. The core strategy of the Bank was 'Profitable
Growth from the grass-roots' by garnering low cost deposits on the liability side and
extending qualitative credit on the assets side. Due to this strategy, the Bank stands
tall amongst its competitors in terms of Domestic Business, Domestic Deposits, Domestic
Advances, CASA Deposits and Operating Profit during FY'15.
During FY'15, the Bank has crossed several milestones i.e., ' 8.80 lakh crore Global
Business, ' 6.00 lakh crore Global Assets, ' 5 lakh crore Global Deposits, ' 1.80 lakh
crore CASA Deposits and ' 1 lakh crore Overseas Business. The Bank's Global Business
reached close to ' 8.82 lakh crore as at end of March'15 reflecting a growth of 10.1% on
yearly basis. The Bank's International business crossed the landmark of ' 1,00,000 crore
and reached ' 1,00,785 crore while recording a robust YoY growth of 37.2%. While the
Global Deposits of the Bank at ' 5.01 lakh crore grew by 11.1%, Net Advances recorded
growth of 9.0% to reach ' 3.81 lakh crore as on 31st March 2015.
In terms of Bottom-line parameters, the Bank's Operating Profit increased from ' 11384
crore as at 31st March'14 to ' 1 1955 crore as at 31st March'15.
However due to higher provisions, the Net Profit stood at ' 3062 crore. In terms of key
ratios, Net Interest Margin at over 3% for the Financial Year ended March'15 remained one
of the highest amongst nationalized banks. Further, the CRAR of the Bank at 12.21% stood
above the stipulated level.
To summarize, Financial Year 2014-15 was a year in which we focused on further
strengthening our businesses, bottom line parameters, network, technological capabilities
and operating parameters. With continued improvements in its key financial parameters,
vast network, large customer base and a healthy capital position, the Bank has created a
platform for achieving and sustaining robust growth in the future.
In this backdrop, your Directors take pleasure in placing the Bank's Annual Report for
2014-15 along with its audited annual financial statements.
A. FINANCIAL HIGHLIGHTS
A.1. BALANCE SHEET
A.3. KEY RATIOS
|Cost of Funds
|Yield on Funds
|Return on Equity
|Net Interest Margin
|Return on Assets
|Cost to Income Ratio
|Operating Expenses to Average Working Funds
|Operating Profit to Average Working Funds
|Earnings per share (Rs)*
|Book value per share (Rs)*
|Provision Coverage Ratio
|CRAR - Basel III
* Face Value of share after splitting is ' 2/-
B. OPERATIONAL HIGHLIGHTS
Towards bringing efficiency in pension disbursement, the Bank introduced a new
facility i.e. Digital life certificate. Further, the Bank started working in coordination
with the Government to be in pilot run of e-PPOs (Electronic Pension Payment Orders). In
order to avoid delay in submission of Life Certificates by Pensioners in November every
year, the Bank initiated the process of sending SMS reminders to pensioners to submit Life
Certificate and taking lead in developing life certificate schemes.
A new system driven Preventive Monitoring System (Early Warning) was
operationalised in the Bank w.e.f. July 2014 for better monitoring of borrowers' financial
health and taking timely action for reduction/containment of NPAs.
The Bank was under parallel run for adoption of Foundation Internal Rating Based
Approach (FIRB) for Credit Risk and The Standardized Approach (TSA) for Operational Risk.
The Bank also submitted formal Letter of Intent for adoption of Advanced Measurement
Approach (AMA) for Operational Risk and Internal Models Approach (IMA) for Market risk.
The Bank initiated the concept of designating certain major cities as Pragati
cities where all branches were opened under Pragati Model. Presently three cities namely
Bhopal, Noida and Patiala have attained Pragati City status.
Moving towards digitalization, the Bank developed another platform for
redemption of card loyalty points earned on usage of debit cards known as "PNB
Rewardz Mobile App". With the help of this Mobile App, customers can register for PNB
Rewards, check their reward points, redeem online and get alerts for deals &
The Bank put in place a proper marketing structure and separate vertical based
on "Feet on Street" concept to acquire fresh business. This would facilitate the
effective publicity of products of the Bank.
The Board of Directors in its meeting held on 8th May 2015 recommended
dividend of ' 3.30 per equity share of ' 2 each (i.e. 165%) for FY'15.
D. BUSINESS OVERVIEW
The Bank's total business reached ' 8,81,913 crore at the end of March'15, registering
an absolute increase of ' 81247 crore and a YoY growth of 10.1%. The Bank's Overseas
Business grew by 37.2% during the year, crossing ' 1 lakh crore milestone. The share of
Overseas Business in Global Business stood at 11.43% as at 31st March'15 as
compared to 9.17% in corresponding period last year.
2. Resource Mobilization
The Bank's Total Deposits amounted to ' 5,01,379 crore as at the end of March'15,
showing an absolute accretion of ' 49,982 crore and a growth of 11.1% over previous year.
The CASA Deposits of the Bank increased to ' 1,83,780 crore, registering YoY growth of
6.3%. The share of low cost deposits in total domestic deposits was 40.57% in FY'15. As on
20th March 2015 i.e. the Last Reporting Friday (LRF) of FY'15, PNB's share in
system's Aggregate Deposits reached 4.89%.
The Bank launched NRI Deposit Campaign from 01.11.14 to 31.01.2015 in which ' 2876
crore were mobilized in 10,785 accounts. The Bank's share in NRE Deposit in the system
increased to 2.39% in Mar'15 from 2.20% of Mar'14.
The Bank also launched "Locker Campaign" in the same period wherein 1 1,703
lockers were leased out and arrear rent of ' 65.42 lakh was recovered. Total revenue of '
79.97 crore was generated during FY'15 by recovery of Locker rent.
The Bank also conducted a campaign for the "Family Suraksha Bachat Khata"
(FSBK) Product from 23.08.2014 to 31.12.2014 and 20801 accounts were opened mobilizing '
90.22 crore. Total insurance premium of ' 16.13 crore under FSBK was collected and
commission of approximately ' 4.80 crore was earned by the Bank.
3. Credit Deployment and Delivery
Net Advances of the Bank as at the end of March 2015 stood at ' 3,80,534 crore,
compared to ' 3,49,269 crore as at end of March 2014, registering an increase of ' 31,265
crore or 9.0% over last year. Yield on Advances of the Bank stood at 9.88% for the year
ended March 2015. As on 20th March 2015 i.e. the Last Reporting Friday (LRF) of
FY'15, PNB's share in system's credit reached 4.80%.
The Technology Upgradation Fund Scheme (TUFS) is a flagship scheme of Ministry of
Textile for modernization and technology upgradation in the textile sector. PNB is the
designated Nodal Bank for claiming subsidy under TUFS. For speedier processing of claims,
a dedicated cell at the Corporate Office was established. The Bank had approximately 1041
accounts under TUFS pertaining to SSI and Non SSI category. During FY'15, the Bank
received TUFS subsidy amounting ' 126 crore from Ministry of Textile and disbursed to the
eligible borrowers. Further, there were around 316 accounts covered under 15% Credit
Linked Capital Subsidy Scheme (CLCSS) and the subsidy amounting ' 27 crore received from
Ministry of MSME during FY'15.
To strengthen the credit monitoring system, an Independent Department was functioning
at Head Office with a General Manager as its vertical Head. Similarly, Nodal Officers were
appointed in all the FGMOs/COs to have continuous watch over the health of the assets. All
weak and irregular accounts were monitored through Task Force Meetings at different levels
of the Bank i.e. CO/FGMO & HO on continuous basis. The core issues of weaknesses in
the accounts were identified and addressed.
In order to improve the system's ability to deal with corporate distress and financial
institution distress by strengthening real and financial restructuring as well as debt
recovery, the Bank complied with the framework for Revitalizing Distressed Assets, which
was made fully effective from 01.04.2014.
To detect early warning signals in Loan Accounts, a new Preventive Monitoring System
(PMS) module was introduced wherein PMS reports were being maintained online on monthly
basis, which was earlier done on quarterly basis.
i. Loan Syndication
The Bank has a Syndication Department at Head Office and Syndication Cells at Mumbai
and Chennai. The Bank also has a dedicated Technical Cell at Head Office which undertakes
Project Appraisal and Techno Economic Viability (TEV) Studies. These studies are for
internal use and for sharing with participating banks as part of syndication assignments.
During FY'15, the Bank gave approvals for syndication/ appraisal of debt aggregating '
16,420 crore with PNB's share of ' 3631 crore. Total income booked out of this activity
during FY'15 stood at ' 9.44 crore.
ii. Retail Credit
The growth of Retail Loan portfolio continued to be the thrust area of the Bank in
FY'15. The Bank's policies on the product development were as per the customers'
requirements, prudent pricing, customization and aggressive marketing. They were directed
towards boosting business under Retail Loan Segment. The Bank has 81 specialised 'Retail
Asset Branches' with an exclusive focus on Retail Credit.
Aggregate Retail portfolio of ' 38,864 crore as on 31.03.2014 increased to ' 48,415
crore as on 31.03.2015 showing YoY growth of 24.60%. The Core Retail Advances comprising
Housing, Vehicle, Education, Personal & Pensioner, Gold Mortgage & Reverse
Mortgage Loan Schemes increased from ' 31,930 crore as on 31st March 2014 to '
40,552 crore as on 31st March 2015 recording YoY growth of 26.0%. The share of
Retail loan in Bank's total Non Food Gross Advances as on 31st March 2015 was
14.49% as compared to 12.42% as on 31st March 2014.
The Housing Loan segment registered YoY growth of 26% with an outstanding amount of '
21,544 crore as on 31st March 2015. The outstanding under Vehicle Loan segment
increased to ' 4089 crore as on 31st March 2015 registering YoY growth of 14%.
Mortgage loans witnessed a growth rate of 77%.
The Bank also implemented various Government of India schemes such as Credit Guarantee
Fund Scheme for Low Income Housing (CRGFSLIH), Housing Interest Subsidy Scheme under the
name of "Rajiv Rin Yojana" launched by Ministry of Housing & Poverty
Alleviation and Education Loans interest Subsidy under Central Scheme for Interest Subsidy
(CSIS), New CSIS and 'Padho Pradesh for Minority Communities'.
iii. Priority Sector
The Bank achieved National Goal of 40% under Priority Sector as on 31st
March 2015. The achievement of Priority Sector advances was ' 1,35,812 crore as on March
2015 i.e. 42.89% of Adjusted Net Bank Credit against the National Goal of 40%. The Bank
also achieved all other National Goals under the segment e.g. Credit to Direct
Agriculture, Credit to Weaker Section and Credit to Women beneficiary.
|Priority Sector Credit
|(a) Agriculture Sector
|(b) MSME (Priority)
|- Credit to Weaker Sections
|- Credit to Women Beneficiaries
Achievement of National Goals
|%age to ANBC
|Priority Sector Credit
|(a) Agriculture Sector
|(b) Direct Agriculture
|(c) Credit to Weaker Sections
|(d) Credit to Women Ben.
Credit to Agriculture
Credit to Agriculture sector stood at ' 60,006 crore as on 31st March 2015
as against ' 54,586 crore as on 31st March 2014. The ratio of Agriculture
Advances to ANBC was 18.95% against the prescribed National Goal of 18%. The achievement
under Direct Agriculture Advances of the Bank was ' 48,569 crore i.e. 15.34% of ANBC
surpassing the National Goal of 13.5% in March 2015. The Bank issued 2.87 lakh Kisan
Credit Cards (KCCs) during FY'15 taking the cumulative number of KCCs issued to 51.19 lakh
since inception. During FY'15, the Bank disbursed Agriculture loans to the tune of '
49,603 crore to 25.62 lakh farmers.
The Bank's focus was on increasing investment credit under Direct Agriculture
especially on High-Tech Agriculture Projects under Green House / Poly House Farming,
Sprinkler/ Drip Irrigation Systems, Tissue Culture, Horticulture, Floriculture, Commercial
Dairy, Fishery, Poultry, Financing Commercial Agricultural Farming, Plantation for
forestry and Agri. Logistics like Rural Go- down / Cold Storage & Agri Transport etc.
besides traditional agriculture financing.
New schemes Formulated
To keep pace with changing scenario, the Bank formulated following new schemes
to boost Agriculture credit:
a. PNB Dugdh Vikas Yojana: For setting up of Milk collection centers; for purchase of
Milch cattle, construction of sheds and meeting working capital requirements of Farmers
under Tie-up arrangements with Village Level Milk Society/Co-operative Milk Unions and
Private Dairy Company.
b. For promoting Organic Farming by the Farmers for Commercial purpose.
c. Scheme for financing to Farmers / Producers under Contract Farming arrangements.
d. Scheme for financing to Registered Farmer Producer Organizations (FPOs) & Farmer
Producer Companies (FPCs) was approved by the Board of the Bank. Under the scheme, FPCs
were offered loans up to ' 1.00 crore without any collateral subject to cover under Credit
Guarantee Fund for Small Farmers' Agri-Business Consortium (SFAC). MOU was signed with
SFAC to seek guarantee cover under the said scheme.
To provide relief to farmers who suffer losses due to reasons beyond their
control, policy for restructuring of Agriculture Debts was formulated (other than natural
calamity). Under the policy for restructuring of Agriculture overdues - principal &
interest was vested with Branch Officials for loans up to ' 10.00 lakh. To meet urgent
need of farmers immediate relief upto ' 50000/- were provided to farmers holding KCC under
facilities like Kisan Tatkal Card Scheme.
Modifications/Concessions in ROI in existing schemes
The limits under Kisan Credit Card and Kisan Gold Schemes were enhanced from '
20 lakh to ' 50 lakh during the year for meeting the increased credit needs of the farmers
Relaxation in Rate of Interest for construction of Rural Godown and Cold
Storages extended during FY'15.
Relaxation in Rate of Interest was approved for financing under Rural
Godown/Warehouse/Cold Storage and SHG schemes.
Celebration of Campaigns/Weeks
As a step forward to extend focused credit to small and marginal farmers for
inclusive growth, the Bank organized Special Agriculture Credit Campaigns from 16.06.14 to
20.09.14 & 01.11.14 to 31.01.15. During the Kharif / Rabi seasons, the Bank disbursed
' 7065 crore against the target of ' 6600 crore.
The Bank also celebrated Dairy Week from 1 1.08.2014 to 1 6.08.201 4, Farm
Mechanization Week from 20.08.201 4 to 26.08.2014 and 15.12.2014 to 21.12.2014, SHG/ JLG
fortnight from 06.10.2014 to 18.10.2014 and week from 09.03.2014 to 16.03.2014.
The Bank observed Agriculture Week from 12.01.2015 to 19.01.2015 and High Value
Agriculture Project Financing week from 27.01.2015 to 02.02.2015.
Upgradation of Skills & knowledge dissemination
To upgrade skills of Agriculture Officers, specialized training with the support
of outside agencies like National Institute of Rural Development (NIRD) Hyderabad, IBM
Pune, College Agriculture Banking (CAB) Pune and Bankers Institute of Rural Development
(BIRD), Lucknow for financing high value projects/investment credit proposals was
To promote financial literacy in rural areas and to create awareness about the
Bank's schemes, a Documentary Film 'VARDAAN' was launched which was screened by the Bank
at the Kisan Goshthies, Farmer Training Centres, Rural Self Employment Training Institutes
(RSETIs), etc. for the farming community and also at the Bank's own training centres for
creating awareness among the staff members.
Farmers' Training Centres were geared up to educate & encourage farmers for
adopting composite sustainable commercial agriculture ventures and High Value Agriculture
All the important schemes related to agriculture were updated on
www.pnbindia.in. All the important documents, forms and circulars have been uploaded on
the Knowledge Center website of the Bank.
Lending Automation Processing System (LAPS) was made mandatory for 22 schemes,
which were customized in LAPS, from 01.07.2014 to facilitate speedy disposal of
Agriculture loan proposals.
PNB Score Model for Farm Sector was developed for assisting branches in taking
objective lending decisions in accounts for Agriculture and Allied Activities upto limit
of ' 50 lakh. The application of the model was launched on pilot run in 154 identified
The Bank made Tie ups with the leading manufacturers of agriculture implements
& tractors, irrigation solutions, etc. during FY'15. During the year, the Bank also
laid focus on increasing livestock advance portfolio by financing through tie ups with
dairy companies/cooperatives. Further, the Bank focused on financing to Agri logistics
like Rural Godown/ Cold Storage & Agri Transport.
The Bank geared up 14 Specialized Agriculture Finance Branches & Special
Agriculture Cells was established in 16 branches for increasing focus on high-tech
agriculture projects. An independent portal was developed for online monitoring of 598
Credit to Weaker Sections & SC/ST
As on 31st March 2015, the Bank's credit to weaker section increased by '
1690 crore on YoY basis to reach ' 32,187 crore. Ratio of Weaker Sections Advances to ANBC
stood at 10.16%, exceeded the National Goal of 10%. Total outstanding of SCs/STs stood at
' 4045 crore in 4,10,575 accounts.
Credit to Women beneficiaries
Credit to Women Beneficiaries was 5.27% of ANBC i.e., ' 16,689 crore as on 31st
March 2015 against the National Goal of 5%. A women cell was functioning and monitoring
the progress under various lending schemes for women beneficiaries at Corporate Office.
Credit to Minority Communities
The Bank's credit to minority communities stood at ' 20,936 crore as on 31st
March'15 as against ' 18,923 crore as on 31st March'14. The credit to
minorities constituted 15.41% of Priority Sector Advances.
A new Scheme of National Rural Livelihood Mission (NRLM) was launched in June 2013
which promoted the formation of women SHGs on the basis of affinity and not on the basis
of a common activity.
Interest rate of 7% p.a was charged for financing to women SHGs in rural area.
Subvention was available under this scheme and additional Interest Subvention of 3 % was
provided to the SHGs on prompt payment in 150 identified districts. In FY'14, the Bank
received subvention claim of ' 1,77,64,031/- which were credited into the beneficaires
accounts. The claims for FY'15 are yet to be lodged.
Micro finance through formation of SHGs & credit linkage of SHGs gained momentum
during FY'15. As at the end of March 2015, the Bank had credit linked 2,16,878 SHGs with
an amount ' 2013 crore, registering an increase of 12026 SHGs. The number of deposit
linked SHGs rose to 2,62,593 cumulatively from 2,46,258 as of previous financial year. The
Bank had 1,55,210 credit linked women SHGs and 1,85,719 saving linked women SHGs as on 31st
iv. Micro, Small and Medium Enterprises
The Micro, Small & Medium Enterprises (MSME) plays an important role in economic
development through their contribution to GDP, exports and employment generation in
manufacturing and service sectors.
At the end of March 2015, the credit to MSME sector stood at ' 91,093 crore thereby
registering a growth of 21.37% over March 2014 constituting 26.45% of total Non-Food
Credit. As against the Statement of Intent (SOI) target of MSE advances of ' 71,100 crore
for March 2015, the achievement stood at ' 71,590 crore registering growth of 20.90%.
The Bank implemented recommendations of High Level Task Force constituted by Hon'ble
Prime Minister to address the issue of Micro, Small & Medium Enterprises (MSME) sector
Ensuring achievements of 20% growth in credit to Micro and Small Enterprises on
Year on Year (YoY) basis. Against the growth of 20% envisaged for March 2015, the
outstanding MSE advances were ' 71,590 crore as on 31st March'15, showing YoY
growth of 20.90%.
MSME share in Non-Food Credit of the Bank increased from 23.91% in March 2014 to
26.45% in March 2015.
The Bank opened 64,327 new Micro Accounts during FY'15 recording YoY growth of
13.72% over 4,68,918 Accounts as on March 2014 compared to the goal of 10%.
The Bank leveraged Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
scheme for providing collateral free loans upto ' 100 lakh with focused attention, vesting
Branch Managers with higher loaning powers. As a result, during FY'15, the Bank covered
25,325 cases under the scheme with the credit outlay of ' 1334 crore.
The Bank adopted Code of Bank's Commitment for Micro and Small Enterprises (MSE)
formulated by Banking Codes and Standards Board of India (BCSB). This was a voluntary code
which set minimum standards of banking practices for banks to follow while dealing with
MSEs. It also explained as to how banks were expected to deal with MSEs for their
day-to-day operations and in times of financial difficulty.
MSME Credit Growth Initiative Branches
MSME Credit Growth Initiatives were launched in 250 branches in the month of January
2014, primarily with the following 2 goals to be achieved under this initiative. After
this, 35 more branches were added from November 2014 onwards taking the total number of
such branches to 285.
To reduce turnaround time to 2-4 weeks;
To grow MSME portfolio by 30% on YoY basis.
The MSME portfolio of these identified branches increased from ' 36,283 crore as on 31st
March 2014 to ' 44,983 crore as on 31st March 2015, registering growth of 24%
against the Bank's overall growth rate of 21.37% in MSME portfolio.
Interest Concession on Advances to Food & Agro Based Processing Units
Concession in Rate of Interest ranging from 0.50% to 2.50% on Food and Agro based units
were extended by the Bank. Apart from that, concession in processing / upfront fee of 50%
was also available in these units.
Concession in Rate of Interest to MSME units engaged in manufacturing of
Special concessional Rate of Interest i.e. BR+1% to BR+2% was available to MSME units
engaged in manufacturing of Agriculture Inputs.
Loan against Warehouse Receipt
Special concessional Rate of Interest i.e. BR+1%, (inclusive of charges of Collateral
Managers) was available under the scheme.
Interest Concession to Micro and Small Enterprises Covered Under CGTMSE
The Bank extended interest concessions to MSE accounts covered under CGTMSE upto 0.25%.
Maximum Rate of Interest capped at BR+4.00% including term premia was available in the
CGTMSE covered accounts.
New Schemes Formulated during FY'15
The Bank formulated a new Scheme i.e., "Supply Chain Financing" for reputed
vehicle manufacturing units. In addition to this, the Bank devised two more schemes such
as PNB Nirmata for financing MSME manufacturing units and PNB Sewa for financing MSME
Further, the Bank revamped the Scheme for traders as Kushal Vyapari & Super Trade
during FY'15. The Bank also revised the scheme of General Credit Card for non-agricultural
During FY'15, the Bank entered into a tie up with National Small Industries Corporation
(NSIC). In this, NSIC would source the applications to the Bank with sharing of processing
fee. Besides, the Bank also formulated Scheme for financing Business Correspondents.
The Bank adopted the cluster based lending approach and adopted 55 clusters to give
extensive services to the MSME sector.