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Punjab National Bank

BSE: 532461 | NSE: PNB ISIN: INE160A01022
Market Cap: [Rs.Cr.] 24,999.43 Face Value: [Rs.] 2
Industry: Banks - Public Sector

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Director's Report


Punjab National Bank aligned its business plan with the cyclical movement in Indian economy to overcome the challenging times during FY’14. PNB maintained its Number One position amongst nationalised banks in terms of Domestic Business, Domestic Deposits, Domestic Advances, CASA Deposits and Operating Profit as on 31st March’14. Further, the Bank with more than 6200 branches has largest domestic network amongst nationalised banks serving more than 8.9 crore customers.

During FY’14, the Bank crossed various new landmarks such as Rs. 8 lakh crore of Aggregate Global Business, Rs. 4.5 lakh crore Total Deposits, Rs. 3.50 lakh crore Gross Advances, Rs. 1.70 lakh crore CASA Deposits, Rs. 1.40 lakh crore Saving Deposits, Rs. 30,000 crore Current Deposits and Rs. 11,000 crore Operating Profit. The Bank has achieved reasonable performance in overseas operations with Overseas Business and Overseas Advances crossing Rs. 70,000 crore and Rs. 40,000 crore respectively.

In terms of profitability ratios, the Bank recorded one of the highest Net Interest Margin of 3.44% during FY'14. Further, the capital adequacy ratio of the Bank stood at 12.29% as per Basel II and 11.52% as per Basel III as at 31st March’14. The Book value per share increased from Rs. 884.03 in FY’13 to Rs. 952.50 in FY’14. In this backdrop, your Directors take pleasure in placing the Bank’s Annual Report for 2013-14 along with its audited annual financial statements.




(Rs. crore)
Particulars 31st Mar’13 31st Mar’14 Growth (%)
Total Business 700356 800666 14.3
Deposits 391560 451397 15.3
Advances 308796 349269 13.1


(Rs. crore)
Particulars FY '13 FY '14 Growth (%)
Operating Profit 10907 11384 4.4
Provisions 6160 8042 30.6
Net Profit 4748 3343 -29.6



Particulars FY'13 FY'14
Cost of Funds 5.70 5.20
Yield on Funds 8.83 8.31
Return on Equity 15.19 9.69
Net Interest Margin 3.52 3.44
Return on Assets 1.00 0.64
Cost to Income Ratio 42.81 45.06
Operating Expenses to Average Working Funds 1.72 1.79
Operating Profit to Average Working Funds 2.30 2.19
Earnings per share (Rs.) 139.52 93.91
Book value per share (Rs.) 884.03 952.50
Provision Coverage Ratio 58.83 59.07
CRAR - Basel II 12.72 12.29
CRAR - Basel III - 11.52


• The Bank has received approval from regulator for adoption of Foundation Internal Rating Based Approach (FIRB) for Credit Risk on parallel run basis. Further, the Bank has also submitted formal Letter of Intent for adoption of Internal Models Approach for Market Risk.

• The Bank has submitted formal application to RBI for in-principle approval for parallel run of Advanced Management Approach (AMA) for Operational Risk on 22.03.2014.

• The Bank has put in place New Automated PMS (Preventive Monitoring System) for all borrowal accounts having exposure of more than Rs. 1 crore across all branches.

• The Bank launched a Special NPA Reduction Campaign from 1st December, 2013 upto to 31st March, 2014. The campaign is a recovery drive to maintain the focus of the Bank on improvement in asset quality. Progress of this is being monitored on daily basis.

• The Bank launched a ‘PPF campaign’ for the first time from 1st January, 2014 to 31st March, 2014 to augment and create vibrancy in PPF business. Further to augment fee based income, E-freight and E-stamping products initiated during the year.

• To facilitate real time credit into the accounts of PNB Customers, the Bank has entered into an arrangement with UAE Exchange under FLASH Remit. Indian expatriates who have account with the Bank can credit money in their accounts on real-time basis.

• In view of the shortcomings experienced in the off-line technology of Technical Services Providers (TSPs) and Business Correspondents (BCs) to strengthen the financial inclusion initiative, the Bank has moved ahead and acquired its own technology of Kiosk Banking Solution (KBS) where BC services are available on-line mode. All transactions are now in real time on-line in Core Banking Solution (CBS).

• Under Operational Transformation Exercise, the Bank introduced Pragati Productivity Points (PPP) system to measure productivity and efficiency in all domestic general banking branches. This is a unique initiative of its kind by any bank, which provides a comprehensive metric for measuring branch performance and productivity across branches with diverse transaction profiles.


The Board of Directors in its meeting held on 31st January 2014 declared the dividend @ Rs. 10 (i.e. 100%) per equity share of Rs. 10 each for FY’14.


1. Business

Bank’s total business reached Rs. 8,00,666 crore at the end of March’14, registering an absolute increase of Rs. 1,00,310 crore and a YoY growth of 14.3%. The Bank’s overseas business increased by 52% over previous year to reach Rs. 73,447 crore.

2. Resource Mobilization

Bank’s total deposits amounted to Rs. 4,51,397 crore as at the end of March’14, showing an absolute accretion of Rs. 59837 crore and a YoY growth of 15.3 %. The share of low cost deposits (current + savings) in total domestic deposits was 41.3% in FY’14 vis--vis 40.9% in FY’13. As on 21st March 2014 i.e., the Last Reporting Friday (LRF) of FY’14, PNB’s share in system’s Aggregate Deposits reached 4.98%.

The Bank launched a Saving Deposit Campaign from 01.08.13 to 31.12.2013 wherein Rs. 2805 crore were mobilized by opening about 11.68 Lac new accounts. An NRI Deposit Campaign was also launched from 01.11.13 to 31.01.2014 to encourage mobilization of NRI deposits in the Bank. During the campaign, Rs. 7541 crore was mobilized in 14,499 new accounts. PNB Saksham, a new product with two variants, has been launched on 11.11.2013. The Bank has mobilized Rs. 25.27 crore under the scheme.

3. Credit Deployment and Delivery

Net advances of the Bank as at the end of March 2014 stood at Rs. 3,49,269 crore, compared to Rs. 3,08,796 crore as at end March 2013, registering an increase of Rs. 40473 crore (YoY growth of 13.1%) over last year. Yield on Advances of the Bank stood at 10.36% for the year ended March 2014. As on 21st March 2014 i.e., the Last Reporting Friday (LRF) of FY’14, PNB’s share in system’s credit reached 4.98%.

PNB is the designated Nodal Bank under Technology Up-gradation Fund Scheme (TUFS) of the Ministry of Textiles, Govt. of India. For speedier processing of claims under TUFS, a dedicated cell at the corporate office facilitates distribution of subsidy to eligible textile units. The Bank has 677 accounts in SSI and Non-SSI category along with 396 SSI accounts covered under 15% Credit Linked Capital Subsidy (CLCS) scheme under TUFS. During FY'14, the Bank disbursed Rs. 183.15 crore to eligible textile units under TUFS.

To strengthen the credit monitoring system, an Independent Division viz. Credit Monitoring Division, is functioning at Head Office with a General Manager as its vertical Head. Similarly, nodal officers have been appointed in all the FGMOs/COs to have continuous watch over the health of the assets. All weak and irregular accounts are 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 are identified and addressed.

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’14, the Bank gave approvals for appraisal/ syndication of debt aggregating Rs. 12,578 crore with PNB’s share of Rs. 6201 crore. Total Income booked during FY’14 stood at Rs. 18.54 crore. In addition, Rs. 11.85 crore was received in the form of fees as at 31st March 2014 from assignments in hand.

ii. Retail Credit

The growth of Retail Loan portfolio continues to be the thrust area of the Bank. Bank’s policies on product development as per the customer requirements, prudent pricing, customisation and aggressive marketing are directed towards boosting business under Retail Loan segment. The Bank has 79 specialized ‘Retail Asset Branches’ with an exclusive focus on retail credit.

Retail Credit increased to Rs. 38,864 crore registering YoY growth of 22.5% as on 31st March 2014. The Core Retail portfolio which comprises Housing, Vehicle, Education, Personal, Pensioner, Gold, Mortgage and Reverse Mortgage Loan Schemes increased to Rs. 31,930 crore which grew by 19% (YoY) as on 31st March 2014.

The Housing Loan segment registered a YoY growth of 19% with outstanding amount of Rs. 17,038 crore as on 31.03.2014. The outstanding under Vehicle Loan increased to Rs. 3577 crore as on 31.03.2014 registering a YoY growth of 24%. Education Loan segment at Rs. 4258 crore grew by 6.5%. A noticeable YoY growth of 34% has been witnessed under Personal Loan segment along with YoY growth of 16% and 13% under Reverse Mortgage and Mortgage Loans respectively.

The Bank also implemented various schemes of Govt. of India such as Credit Risk Guarantee Fund Scheme for Low Income Housing (CRGFSLIH), Housing Interest Subsidy Scheme under the name of ‘Rajiv Rinn Yojna’ launched by Ministry of Housing & Urban Poverty Alleviation and Education Loan Interest Subsidy under Central Scheme for Interest Subsidy sanctioned upto 31.03.2009 and outstanding as on 31.12.2013.

iii. Priority Sector

The Bank surpassed National Goal of 40% of ANBC in Priority Sector as on 31st March 2014. The performance highlights are given in the table:

(Rs. crore)

31.03.2013 31.03.2014 YoY Growth
Priority Sector Credit 91076 120008 31.8
Of which:
(a) Agriculture Sector 37777 53053 40.4
- Direct 33809 44406 31.3
- Indirect 3968 8647 117.9
(b) MSME (Priority) 39738 53827 35.5
(c) Others 13561 13128 -3.2
- Credit to Weaker Sections 27588 30497 10.5
- Credit to Women Beneficiaries 14084 14301 1.5

Achievement of National Goals

Parameters % age of ANBC
31st March 31st March
Target 2013 2014
Priority Sector Credit 40.00 33.11 42.30
Of which:
(a) Agriculture Sector 18.00 13.73 18.70
(b) Direct Agriculture 13.50 12.29 15.65
(c) Credit to Weaker Sections 10.00 10.03 10.75
(d) Credit to Women Beneficiaries 5.00 5.12 5.04

Credit to Agriculture

Credit to Agriculture sector increased to Rs. 53,053 crore as on 31st March 2014 registering a YoY growth of 40.4%. The ratio of Agriculture Advances to ANBC was 18.70%. The achievement under Direct Agriculture Advances was Rs. 44,406 crore and surpassed National Goal of 13.5% during FY’14. During FY’14, the Bank has disbursed agriculture loans to the tune of Rs. 43,884 crore to 24.42 lakh farmers and issued 3.37 lakh Kisan Credit Cards.

Initiatives taken by the Bank for increasing flow of credit to agriculture

• Major initiatives

o On all agriculture loans, interest rates have been reduced to BR+ 2% uniformly.

o The Bank launched two "Special Agriculture Credit Campaigns", one from 15.06.2013 to 31.08.2013 during Kharif season and second from 01.11.2013 to 15.01.2014 during Rabi season to increase lending to Direct Agriculture. During the campaign period, Rs. 5088 crore was disbursed to 3.74 lakh new farmers.

o In order to boost agriculture advances, the Bank celebrated "Agriculture Day" on 18.09.2013, "Milk Day" on 19.12.2013 and "Farmers Day" on 23.12.2013. On these three occasions, the Bank disbursed Rs. 1105 crore to 65,292 farmers.

o Farm Mechanization campaign was also launched from 22.02.2014 to 25.03.2014. During the campaign, loans of Rs. 43.22 crore were disbursed in 1218 accounts.

• Modifications in existing schemes

o The limit under Kisan Gold scheme has been enhanced to Rs. 20 lakh.

o Various schemes such as financing for setting up of Custom Hiring/ Service unit, financing against pledge of warehouse receipts issued by cold storage and financing the dealer/seller of agriculture inputs have been modified.

o Scheme for Purchase of Land has been modified. Applicant farmers have been allowed to purchase agriculture land within a radius of 15 kms (earlier it was 3-5 kms) from the existing land owned by them.

o Tractor Loans for repair/renovation of tractors has been enhanced to Rs. 1 lakh and more than 5 years old tractors are eligible under the scheme.

• Other initiatives taken

o Important documents, forms and circulars uploaded on SMILE products of Knowledge center website.

o An independent portal developed for online monitoring of 637 Agriculture officers.

o Upto 31.03.2014, PNB Rupay Kisan card (KCC-Debit Card) were issued in 5.68 lakh KCC accounts out of 15.12 lakh eligible KCC accounts.

o In order to simplify processing of Agriculture loans-Lending Automation Processing System (LAPS) Agriculture module is being implemented.

o RBI has allotted Lead Bank Responsibility of three new districts of Delhi namely North East Delhi, North West Delhi and East Delhi to PNB in July 2013. At present, the Bank has lead responsibility in 63 districts of the country.

o This year Banks focus is on increasing the share of Investment Credit in Agriculture mainly Farm Mechanization, Dairy, Poultry, Plantation, Horticulture, Rural Godowns, Cold storages, Input Dealers etc, apart from financing under KCC by extending our farmers’ base.

Credit to Weaker Sections & SC/ST

Credit to weaker sections by the Bank increased to Rs. 30,497 crore in March, 2014, registering YoY growth of 10.54%. Ratio of Weaker Sections advances to ANBC at 10.75% continued to be higher than the National Goal of 10%. Credit to SC/ST beneficiaries amounted to Rs. 3384 crore as at 31st March 2014.

Credit to Women beneficiaries

The credit to women beneficiaries at Rs. 14301 crore registered 5.04% as percentage of ANBC at the end of March 2014. A dedicated Women Cell functions at Corporate Office which closely monitors the progress under various lending schemes for women beneficiaries and redesigns the existing ones as per emerging needs.

Credit to Minority Communities

Bank’s credit to minority communities stood at Rs. 18,923 crore as on March’14 and constitutes 15.77% of Priority Sector advances.

Micro Credit

The Bank credit-linked 2,04,826 Self Help Groups (SHGs), extending credit amounting to Rs. 18,88.60 crore thus recording YoY growth of 15.54% as at 31st March’14. The number of deposit-linked SHGs rose to 2,46,258 in cumulative terms during FY’14. Further, the Bank has 1,46,545 credit-linked women SHGs and 1,74,587 savings-linked women SHGs. During FY’14, a new scheme for promotion/ support of women Self Help Groups in Backward & Left Wing Extremism affected districts of India has been made operational in 13 identified districts and 4885 SHGs have been formed under the scheme, out of which 1913 SHGs have been credit linked. Further the Bank also implemented National Rural Livelihood Mission (NRLM).

Micro, Small and Medium Enterprises

The credit to MSME sector increased to Rs. 75051 crore registering a YoY growth of 22.08% in FY’14 and constituted 23.91% of Total Non-Food Credit. The advances to Micro Enterprises grew at 30.74% thus reaching a level of Rs. 24,716 crore. The Bank’s MSE advances at Rs. 59,213 crore surpassed Statement of Intent (SOI) target of Rs. 58,500 crore for March 2014. The Bank implemented recommendations of High Level Task Force constituted by Hon’ble Prime Minister to address the issue of MSME sector:

• Against the envisaged growth of 20% in credit to Micro and Small Enterprises, the outstanding MSE advances at Rs. 59,213 crore achieved YoY growth of 21.63%.

• The outstanding number of Micro Enterprises Accounts were 4,68,918 as on 31st March’14, showing YoY growth of 10.04% against the envisaged growth of 10%.

• For speedier appraisal of loan proposals, branches are using the SME Scoring Model for loans upto Rs. 50 lakh.

• Liberal moratorium on term loan and working capital has been extended by including interest also, during first 6-12 months of operation on case to case basis and interest debited during this period is being treated as long term funding of project and installments after moratorium period are fixed accordingly.

During FY’14, the Bank covered 14,925 cases under the CGTMSE scheme with credit outlay of Rs. 870 crore. The Bank is also extending interest concessions to MSE accounts and the rate of interest capped at Base Rate+4.00% including term premia in the CGTMSE covered accounts.

The Bank is also pro-actively participating in various schemes of the Government of India viz., Prime Minister Employment Generation Programme (PMEGP), Credit Linked Capital Subsidy Scheme (CLCSS) for Micro & Small Enterprises, Khadi & Village Industry Commission (KVIC) and Technology Up-gradation Fund Schemes for Textile & Jute Sector (TUFS), Subsidy Scheme for Food Processing Industries, etc.

Other Initiatives

MSME Credit Growth Initiative Branches

MSME Credit Growth Initiative has been launched in 250 branches in January 2014. This initiative proposes to reduce turnaround time to 2-4 weeks and to grow MSME portfolio by 30% from December’13 to December’14. MSME advances in these branches have increased to Rs. 37,462 crore as on 31st March 2014 showing YoY growth of 7.96%.

PNB Sanjeevani

A New Scheme "PNB Sanjeevani" has been launched with competitive Interest rate and other attractive features. This scheme is for financing professionally qualified medical practitioners.

Interest Concession to Micro and Small Enterprises

To support new and existing Micro & Small Enterprises, the Bank is extending interest concessions of 75 basis points on chargeable Interest Rate for loans up to Rs. 25 lakh.

Concessional Interest rates in various schemes

Concession in interest rate ranging from 2.25% to 3.25 % and concession in processing / upfront fee of 50% is available for Food and Agro based units. Special concessional rate of interest i.e. Base Rate+1% to Base Rate+2% is available to MSME units engaged in manufacturing of Agriculture Inputs. Further concessional rate of interest i.e. Base Rate+1.50% to Base Rate+2% is available to Arhtiyas and Commission Agents. The interest rate for loan against warehouse receipt reduced to Base Rate+1% (inclusive of charges of Collateral Managers).

MSME clusters

The Bank has adopted the cluster based lending approach and has 55 clusters to give focused attention to the sector.

Simplified Loan Application for MSMEs (Manufacturing & Service sector) has been made available along with the check list of documents.

Facility of submission of application on-line by prospective borrowers, with the option to track progress of application under MSE segment has been provided. Further a concession of 20% in upfront fee and processing fee is extended to borrowers who submit application on-line.

For growth in Service Sector, the Bank has Tie ups/MoUs with vehicle manufacturers like Tata Motors, Ashok Leyland, Mahindra & Mahindra Ltd., Bajaj Auto Ltd., Piaggio Vehicles P Ltd., Volvo Eicher Commercial Vehicles Ltd., Hindustan Motors Ltd., TVS Motor Co. Ltd., Asia Motor Works, Atul Auto Ltd., JS Auto, ICML Ltd. and Escorts for financing transport dealers.

iv. Financial Inclusion

The following business models are adopted by the Bank for Financial Inclusion (FI):

Direct Benefit Transfer (DBT) Scheme

Government of India has extended scheme of Direct Benefit Transfer in 78 additional districts in phase II w.e.f. 01.7.2013 in addition to 43 pilot districts in phase I w.e.f. 01.01.2013. At present, 26 schemes of central government are being covered. The amount of LPG subsidy is also being reimbursed in 293 districts in six phases, launched with four pilot districts on 01.06.2013. The Bank has covered all SSAs of DBT/ DBTL districts through our banking outlets i.e. bank branches/BC locations. The Bank has lead Bank responsibility in 63 districts, out of which 8 are amongst the 43 pilot districts covered under Phase I and 6 districts are covered under Phase II.

On-line Transactions at BC Locations

To provide BC services in on-line mode, the Bank has put in place Kiosk Banking Solution (KBS) which is a proprietary software. With this new technology, the Financial Inclusion customers can access all basic banking services (account opening, cash withdrawal, cash deposit, mini statement, balance enquiry and fund transfer) required by them at BC location in real time. Now, FIcustomers can also transact on ATMs and Merchant POS outlets. The customers of the Bank (whose biometrics have been captured) can now make banking transactions either at any branch/ ATM or any BC locations across the country. The Bank is also working towards offering inter-operability at BC locations of the Bank that would further facilitate the making of interbank transactions across the country by customers.

The Bank is using Aadhaar Payment Bridge System (APBS) platform of NPCI for DBT/ MGNREGA/ National Social Assistance Programme (NSAP) payments. Now, the Bank is gearing up for Aadhaar Enabled Payment Services (AEPS) for payments by way of Aadhaar authentication from UIDAI data base.

Use of Business Correspondent (BC)

For an efficient and effective BC network, the Bank adopted a mix of BC Models using KBS technology for each Sub Service Area (SSA) or Urban Ward (UW) within the service area of a base branch. The Bank has 8490 SSAs across the country. Out of these 2406 SSAs are covered by branches and 2549 SSAs are covered by BC locations under on-line KBS technology.

• Common Business Correspondents: As per MOF directives in respect of Common BC, the Bank has engaged 89 BCAs of M/s Vakrangee Finserve Limited, a Common BC in Rajasthan.

• Corporate BC: The Bank has engaged 240 Business Correspondence Agents of Corporate BC using KBS technology. The Bank is in process of migrating offline TSP based BC model to online Kiosk Banking Solution (KBS) based Corporate BC.

• Individual BC: The Bank has 915 Individual BC Agents using KBS technology.

• New Initiatives: In addition to providing basic banking facility, new facilities viz., Indo Nepal Remittance, Immediate Inter Bank Remittance (IMPS), Micro Credit, Micro Deposit Scheme, Micro Pension and Micro Insurance have been added and are available at BC locations.

v. Asset Quality

In all Non Performing Assets (NPAs), account-specific resolution strategies were implemented and progress was monitored regularly. Daily progress of recovery in NPAs (outstanding Rs. 10 lacs and above) was monitored and placed before Top Management. Further compromise/negotiated settlements through one to one meeting with borrowers was adopted as another vital strategy to tackle NPAs. The Bank also has 17 Asset Recovery Management Branches (ARMBs) and 20 Special Asset Recovery Cells (SARCs)which function exclusively for resolving NPAs.

Initiatives taken during FY'14

• The Bank has launched a Special NPA Reduction Campaign from 01.12.13 to 31.03.2014. The campaign’s progress is monitored on daily basis. Besides this the Bank has a regular staff Incentive Scheme called "Prayaas" to promote recovery in NPAs and written off accounts.

• Engagement of retired bank officials as Resolution

Futures & Options Quote
Expiry Date :
938.85    15.35 (1.66%)
Instrument: FUTSTK
Expiry Date: 31-Jul-2014
Open Price: 934.25
Average Price: 940.44
No. of Contracts Traded: 10,475
Open Interest: 23,03,500
Underlying: PNB
Market Lot: 500
Previous Close: 938.85
Day's High | Low: 951 | 930
Turnover (Cr.): 492.56
Open Int. Change: 0,12,77,000 ([35.67]% )
Key Information

Key Executives:

A Gopinathan , Company Secretary

Tara Chand Jhalani , Director (Workmen Employee)

B P Kanungo , Nominee (RBI)

Dilip Kumar Saha , Director (Officer Employee)

Company Head Office / Quarters:

7 Bhikhaiji Cama Place,
New Delhi,
New Delhi-110607
Phone : New Delhi-91-11-26102303/26108205/26196487 / New Delhi-
Fax : New Delhi-91-11-26160149/26196462/26196456 / New Delhi-
E-mail : eicmasd@pnb.co.in
Web : http://www.pnbindia.in


Beetal Fin.&Computer Ser.P Ltd
Beetal House 3rd Flr,Behind Local Shp Cen,Nr Dada Harsukh Das ,New Delhi - 110062

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