Punjab National Bank aligned its business plan with the cyclical movement in Indian
economy to overcome the challenging times during FY14. 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 March14.
Further, the Bank with more than 6200 branches has largest domestic network amongst
nationalised banks serving more than 8.9 crore customers.
During FY14, 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 March14.
The Book value per share increased from Rs. 884.03 in FY13 to Rs. 952.50 in
FY14. In this backdrop, your Directors take pleasure in placing the Banks
Annual Report for 2013-14 along with its audited annual financial statements.
A. FINANCIAL HIGHLIGHTS
1 BALANCE SHEET
|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 II
|CRAR - Basel III
B. OPERATIONAL HIGHLIGHTS
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
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 FY14.
D. BUSINESS OVERVIEW
Banks total business reached Rs. 8,00,666 crore at the end of March14,
registering an absolute increase of Rs. 1,00,310 crore and a YoY growth of 14.3%. The
Banks overseas business increased by 52% over previous year to reach Rs. 73,447
2. Resource Mobilization
Banks total deposits amounted to Rs. 4,51,397 crore as at the end of
March14, 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 FY14 vis--vis 40.9% in FY13. As on 21st March 2014 i.e., the
Last Reporting Friday (LRF) of FY14, PNBs share in systems 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 FY14, PNBs share in systems 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
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 FY14, the Bank gave approvals for appraisal/ syndication of debt
aggregating Rs. 12,578 crore with PNBs share of Rs. 6201 crore. Total Income booked
during FY14 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.
Banks 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
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:
|Priority Sector Credit
|(a) Agriculture Sector
|(b) MSME (Priority)
|- Credit to Weaker Sections
|- Credit to Women Beneficiaries
Achievement of National Goals
||% age of ANBC
|Priority Sector Credit
|(a) Agriculture Sector
|(b) Direct Agriculture
|(c) Credit to Weaker Sections
|(d) Credit to Women Beneficiaries
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 FY14. During FY14, 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
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
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
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
Banks credit to minority communities stood at Rs. 18,923 crore as on
March14 and constitutes 15.77% of Priority Sector advances.
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
March14. The number of deposit-linked SHGs rose to 2,46,258 in cumulative terms
during FY14. Further, the Bank has 1,46,545 credit-linked women SHGs and 1,74,587
savings-linked women SHGs. During FY14, 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 FY14 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
Banks 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 Honble 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
March14, 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 FY14, 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
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.
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 December13 to December14. MSME advances in these branches have
increased to Rs. 37,462 crore as on 31st March 2014 showing YoY growth of
A New Scheme "PNB Sanjeevani" has been launched with competitive Interest
rate and other attractive features. This scheme is for financing professionally qualified
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
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
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
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
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
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 campaigns 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