Punjab National Bank Management Discussions

I. Industry Structure & Developments

The global economic landscape presents a picture of decelerating growth amidst persistent uncertainties. The IMF projects global growth at 2.8 per cent for 2025 and 3.0 per cent for 2026, a downward revision from earlier forecasts. A primary factor contributing to this anticipated contraction is the prevalence of higher trade barriers across several G20 economies, coupled with an increase in overall policy uncertainty. This environment is expected to weigh on both investment decisions by businesses and spending by households.

The pressures, though easing globally, remain persistent in certain sectors like services, complicating the path of monetary policy normalization for central banks. IMFs outlook indicates a gradual decline in global headline inflation, forecasting it to be 4.3 per cent in 2025 and 3.6 per cent in 2026. This leads to cautious approaches towards easing interest rates.

Economic growth prospects vary significantly across different regions and countries. The robust economic expansion experienced by the United States in 2024 is projected to moderate considerably. Going forward, the US Economy

. The Euro area is also anticipated to may face stagflation experience subdued growth due to a combination of factors, including geopolitical uncertainty, high energy costs and weak consumer confidence. Emerging market and developing economies are expected to exhibit varied growth patterns, with some showing strong resilience while others face significant challenges.

A significant headwind is the alarming rise in trade restrictions. Effective tariff rates have climbed sharply, reaching levels not witnessed in a century. This surge in protectionism, particularly the recent imposition of new tariffs by the United States and subsequent retaliatory measures by other nations, is dampening global trade volumes. The IMF projects global trade growth to more than halve from 3.8 per cent in the previous year to a meagre 1.7 per cent for CY 2025. This decline in trade activity negatively impacts business investment, supply chains and overall economic sentiment.

High levels of public debt across the globe also present a significant challenge, potentially impacting fiscal sustainability and financial stability, especially as interest rates normalize.

The balance of risks to the global economic outlook is firmly tilted towards the downside. An intensification of trade disputes, further escalation of geopolitical conflicts, a sharper-than-anticipated tightening of global financial conditions, or a inflationary resurgence of pressures could all trigger a more pronounced economic slowdown.

Indian Economic Outlook

In contrast to the prevailing global headwinds, the Indian economy stands out as a beacon of relatively strong and resilient growth. India is projected to maintain its position as one of the fastest-growing major economies worldwide.

The IMF forecasts Indias economy to expand by 6.2 per cent in 2025 and 6.3 per cent in 2026. Other estimates from organizations like the OECD, RBI and S&P Global also hover around the 6.4-6.5 per cent range for FY 2025-26, highlighting a broad consensus on Indias strong growth momentum. Several factors are contributing to the robust growth of the Indian economy. On the demand side, healthy private consumption continues to be a major engine of growth, supported by resilient consumer sentiment. Investment activity has gained traction and it is expected to improve further on the back of sustained higher capacity utilisation, governments continued thrust on infrastructure spending, healthy balance sheets of banks and corporates, along with the easing of financial conditions. Merchandise exports will be weighed down by global uncertainties, while services exports are expected to remain resilient. Headwinds from global trade disruptions continue to pose downward risks.

The cooling inflation, reduction in the policy repo rate by the RBI and income tax relief measures announced in the Union Budget 2025-26 are also expected to provide a boost to domestic demand. Rural demand is also expected to remain strong, fuelled by a thriving agricultural sector. Supportive government initiatives and recent monetary policy easing are also creating a favourable environment for economic activity. On the supply side, prospects of agriculture sector remain bright on the back of healthy reservoir levels and robust crop production. Manufacturing activity is showing signs of revival with business expectations remaining optimistic. The financial sector remains resilient, providing crucial support to economic activity. Indias services sector, including its vibrant technology and business services segments, continues to perform steadily, contributing significantly to growth and exports. Headline Consumer Price Index (CPI) inflation in India has shown a moderating trend which has been largely by a correction in food prices. The softening of inflation along with fiscal consolidation by the government will encourage RBI to continue with its rate easing cycle. Indiasexternalsectorexhibitsconsiderableresilience.Services exports, particularly in areas like information technology and business process outsourcing, have remained relatively buoyant despite global economic uncertainties. Furthermore, the current account deficit has shown a narrowing trend, reflecting a better balance between Indias earnings from and payments to the rest of the world.

Despite the optimistic outlook, the Indian economy is not entirely immune to global headwinds. Escalating trade tensions and tariff uncertainties could negatively impact Indias trade flows and investment climate. A sharper-than-anticipated global economic slowdown could also dampen external demand for Indian goods and services and affect capital flows.

Domestically, volatility in global commodity prices and the potential for adverse weather events pose upside risks to the inflation trajectory.

The global economy is navigating a period of slower growth, primarily due to escalating trade tensions and persistent

The Indian economy, in contrast, is projected to maintain strong growth momentum, driven by robust domestic demand and resilient sectors. While India remains mindful of potential global risks, its strong fundamentals and supportive policy environment position it favourably in the current global economic landscape.

Indian Banking Sector Outlook

The outlook for the Indian banking sector appears stable and positive, underpinned by a resilient domestic economy and improving financial metrics.

Indias robust economic growth, projected at around 6.5 per cent for FY 2025-26 by the RBI and other institutions, continues to fuel credit demand across various sectors. While overall loan growth has seen some moderation in recent months (year-on-year growth of 10 per cent in May 2025), it is expected to recover to 12-13 per cent in the ongoing fiscal year.

The asset quality of Indian banks has shown consistent improvement. Gross Non-Performing Assets (GNPAs) of Scheduled Commercial Banks (SCBs) fell to a 12-year low of 2.5 per cent as on December 2024. This trend indicates better risk management and recovery efforts by banks.

The profitability of Indian banks has been on an upward trajectory. Public Sector Banks (PSBs) recorded a significant 26.3 per cent year-on-year growth in net profit in the FY25, reaching a record high of Rs. 1.78 Lakh Crore. This is supported by strong operating profits and a decline in NPAs.

The Return on Assets (RoA) and Return on Equity (RoE) for banks have also shown improvement.

Indian banks are adequately capitalized, with the Aggregate

Capital to Risk-Weighted Assets Ratio (CRAR) for PSBs standing at a comfortable 14.83 per cent as of December 2024, well above the regulatory requirement. This provides a strong buffer to absorb potential shocks and support future credit growth.

The retail loan sector continues to exhibit strong momentum, driven by demand for personal loans, home loans and gold loans. While the growth rate of unsecured personal loans and credit cards has moderated from previous highs, overall retail credit remains a key growth driver for banks. Credit growth to Micro, Small and Medium Enterprises (MSMEs) and the agriculture sector remains robust, reflecting the banks focus on these sectors.

Funding and liquidity conditions for Indian banks are expected to remain stable, with deposit growth aligning with loan growth. While there is competition for Current Account and Savings Account (CASA) deposits, the overall deposit base continues to expand.

Indian banks are outpacing the global average in the adoption and provision of digital banking services, enhancing efficiency and customer reach.

Potential Challenges and Considerations

While overall asset quality is improving, a Moodys expects a slight deterioration in the coming year due to potential stress in unsecured retail loans, microfinance and small business loans. Banks will need to remain vigilant in monitoring these segments.

Interest rate cuts by the RBI, could lead to a slight compression in Net Interest Margins (NIMs) as loan rates are repriced before deposits. However, non-interest income is expected to remain robust. While the domestic outlook is positive, the Indian banking sector remains indirectly susceptible to global economic uncertainties, including trade tensions and a potential global slowdown, which could impact trade finance and overall economic sentiment.

Overall, the Indian banking sector appears well-positioned to support the countrys economic growth in FY 2025-26. Strong fundamentals, improving asset quality, healthy profitability and adequate capital buffers provide a stable outlook. While some challenges remain, the sectors resilience and adaptability suggest continued positive performance.

II. Opportunities

As India aims to achieve its USD 7 trillion economy target by 2030, the banking sector is poised to play a crucial role in driving economic growth. Supported by targeted fiscal and monetary measures designed to enhance banking activity, along with technological innovations and a dynamic customer environment, the banking industry is undergoing a remarkable transformation.

The Union Budget 2025-26 with its focus on capex, private consumption, skilling and employment generation serves up several opportunities for growth of the banking sector.

Alongside fiscal prudence, the government has maintained its thrust on infrastructure creation in the Union Budget with capital expenditure budgeted to grow 10 per cent year-on-year in FY 2025-26 to Rs. 11.2 trillion (from the revised estimates of 10.2 trillion in FY 2024-25). Further, the Asset Monetization Plan for 2025-2030 wherein public assets worth Rs.10 Lakh

Crore will be monetized for infrastructure growth, setting up of an Urban Challenge Fund of Rs. 10,000 Crore for FY 2025-26 to redevelop cities and capital expenditure on specific sectors including roads, railways, defence and telecommunications will spur economic development and credit demand.

Further, the Union Budget has announced several measures that are expected to substantially benefit the Banking industry.

To touch upon a few, the tax measures announced in the Budget are expected to enhance bank deposits on the back of higher savings among citizens. The increase in deposits will help enhance liquidity in the banking system, allowing banks to extend loans to keep the momentum going.

Lending opportunities will also get a lift from the enhanced credit through KCC which will provide relief to farmers during distress and price fluctuations and PM Matsya Kisan Samridhi Sah-Yojana which will formalize the fisheries sector to boost credit flow. The Governments thrust on clean technology will drive domestic manufacturing in emerging sectors of renewable energy, EVs & battery tech, critical minerals, etc. and generate credit demand in these sectors. Substantial increase in allocation to PLI schemes in electronics and IT hardware, automobiles and auto components and textile sector will boost capex in these sectors; thereby enhancing credit offtake.

With the India Meteorological Department (IMD) forecasting an above-normal monsoon in FY 2025-26, a rise in demand for agricultural loans can be anticipated. The agriculture sector will sustain its momentum with a bumper Rabi and Kharif crop and comfortable reservoir levels. Credit demand is likely to be higher to support working capital requirements for crop production activities, loans for buying farm equipment and term loans and working capital for allied agriculture activities, especially for agriculture storage and financing for food and agro-processing. During Apr24-Mar25, bank credit by Scheduled Commercial Banks (SCB) to agriculture and allied activities grew 10.4 per cent YoY. However, heatwaves and the possibility of extreme weather events pose risk to the downside.

Following the Reserve Bank of Indias intervention in November 2023, there has been a notable slowdown in the growth of unsecured loans. On the other hand, there has been a significant increase in gold loans. The rise in gold prices has fueled the growth in retail gold loans during this period.

It is anticipated that in the fiscal year 2026, retail loans will continue to be a primary focus for banks, with mortgages remaining prevalent due to ongoing demand for housing, expected interest rate reductions, improving asset quality and larger ticket size.

Indias bank credit-to-GDP ratio is comparatively low relative to other nations, indicating substantial potential for overall credit growth. In FY25, the pace of credit offtake slowed, primarily due to a reduction in unsecured retail lending and a decrease in loans to non-banking financial companies (NBFCs). However, recently, the Reserve Bank of India (RBI) restored the earlier risk-weights applicable to NBFCs, which is expected to increase the flow of funds from banks to NBFCs for on-lending.

Along with the postponement of the Liquidity Coverage Ratio (LCR) framework, these are expected to enhance bank credit growth in FY26.

Indias digital lending landscape is experiencing a significant transformation. This change is driven by technological advancements, regulatory updates and shifting consumer preferences. As a result, digital lending is revolutionizing the way both individuals and businesses obtain credit. The emergence of paperless loan applications, combined with

AI-powered credit assessments, is streamlining the lending process, making it quicker, more accessible and more user-friendly for borrowers.

In FY 2024-25, the Bank has not only embraced digitalization but has also emerged as a frontrunner in the domain of digital banking services. The PNB One Mobile Banking App and Internet Banking Services have been enriched with 250+ features, catering to diverse customer needs and preferences. Additionally, the Bank has launched a mobile banking application for corporate customers, which is enriched with 150+ features. To further enhance customer convenience, the Bank has launched several digital lending journeys during FY

2024-25. PNB became the first bank to launch PM Vishwakarma

Scheme in digital mode. Other digital journeys include Digital Education Loan, Digital Working Capital Renewal, Digital Vehicle Loan, etc. Further, to cater to the evolving needs of tech-savvy customers, the Bank launched WhatsApp banking with 80+ services available. During FY 2024-25, several new functionalities have been introduced as well.

Environmental, Social and Governance (ESG) considerations have become central to strategic decision-making in the banking sector. Green financing initiatives, sustainable lending practices and supporting businesses with a strong social impact are no longer optional but are essential for long-term success.

The Governments focus on renewable energy further drives this shift. Banks that proactively integrate ESG principles into their operations are not only contributing to a more sustainable future but also enhancing their reputation, attracting socially conscious investors and mitigating environmental and social risks. The Bank has been awarded the First prize in the Global

Fintech Awards 2024 for FY 2024-25 in the category of Green

Banking Initiative of the Year for PNB One mobile application based on-boarding of customers through Aadhaar.

The micro-finance sector is recovering from its prolonged slump due to concerns about asset quality and regulatory changes. Indicators are now pointing towards improvement in the asset quality of Micro Finance Institutions (MFIs). Improvement in MFI outlook and strong loan growth is boosting investor confidence- attracting foreign capital into this sector. Banks can partner with MFIs to leverage their grassroots networks. These collaborations can help banks reach unbanked communities and reduce the risks associated with lending to small borrowers.

III. Threats

Banks will continue to face competition for deposit accretion, especially for low-cost Current and Savings Account (CASA) deposits. The past two fiscal years exposed a worrying mismatch: credit expansion outpaced deposit growth, creating liquidity pressures for banks. Though this imbalance has eased due to a slowdown in credit demand, low deposit growth remains a challenge.

Banks are likely to witness pressure on their Net Interest Margins (NIMs) as advances will be repriced immediately while deposits will be repriced with a lag. However, during the latter part of the year, with likely reduction in fixed deposit rates, banks deposit accretion is expected to shift towards low-cost CASA deposits.

Asset quality although remains a bright spot for the banking sector, with gross non-performing assets (GNPA) at a 12-year low of 2.5 per cent and net non-performing assets (NNPA) at 0.6 per cent as on 31st December 2024. Stress is emerging in unsecured retail loans, including personal loans, credit cards as misconducts in these segments have risen, especially among self-employed individuals and younger borrowers with informal income sources.

Further, the sector confronts cybersecurity threats which are now growing even more sophisticated. Ransomware attacks have grown more targeted, often paralyzing critical systems and demanding huge payments, highlighting the need for robust backups and encryption. Cybercriminals are increasingly using

Artificial Intelligence (AI) to launch sophisticated phishing schemes and adaptive malware, making AI-driven defences indispensable. With the shift to cloud-based infrastructures, banks are vulnerable to data breaches, requiring strong encryption, multifactor authentication and consistent audits.

Dependence on third-party vendors introduces further risks, necessitating stringent cybersecurity protocols and regular assessments. Additionally, the advent of quantum computing poses a future threat to traditional encryption, urging banks to adopt quantum-safe cryptography. These evolving challenges call for constant innovation and proactive investment in robust security measures.

Apart from this, competition for tech-savvy talent is gearing up and banks must constantly upskill their workforce and upgrade their systems to stay competitive. As per a recent Report published in the month of February25, certain sectors such as AI-ML, emerging tech (crypto and block-chain), IT Start-ups and BFSI sector are witnessing good traction in overall hiring levels. Further, specialized roles such as Machine Learning and Investment Banking are high in demand.

Although rising global uncertainties and a weakening global economic outlook could impact overall growth and the banking industry as well in the form of weak demand, India is relatively insulated from external headwinds owing to its robust domestic economy, modest external debt to GDP ratio, relatively lower dependence on exports and substantial forex reserves. Indias forex reserves stood at USD 668.3 billion at the end of the

FY 2024-25. Forex reserves have been consistently rising and were at the highest in FY 2024-25.

As the regulatory environment is rapidly evolving, it is also imperative for banks to prioritize governance, risk management and compliance while remaining competitive and innovative to meet customer expectations. In the near future, banking industry will be expected to navigate an uncertain regulatory environment, exhibit financially resilient and keep an eye out for non-financial risks and internal controls. In this regard, use of AI can greatly help improve corporate governance. AI can predict fraud and suspicious transactions, track conflict of interest, monitor regulatory changes and ensure accurate financial reporting - thereby helping in managing multiple compliance regimes.

Indian banks are investing in IT infrastructure while adhering to the regulatory frameworks, such as data localization, customer consent management and risk mitigation. Many institutions are adopting a hybrid approach, building in-house data science teams to customize AI-driven solutions using existing open-source models. This ensures that AI innovations align with the unique requirements of Indian banking while maintaining compliance and operational control.

Moreover, with growing awareness and increasing focus on

ESG-Environment, Social, Governance factors, there is an increasing need for banks to enhance technology to track and manage their performance on ESG metrics Banks, especially PSBs will be required to upgrade their systems to integrate software that will help them automate the tracking and monitoring of complex compliance regulations, manage risks, ensure accuracy of financial reporting and conduct assessments. However, it is also important to manage AI systems with caution and establish appropriate safeguards as AI comes with its own share of risks including data bias and threat of breach of trust.

IV. Outlook

Credit growth in the past FY 2024-25 has been lowest in the last three years as growth of the economy slowed down, liquidity was scarce and banks tried to moderate their high credit deposit ratios. Credit growth of Scheduled Commercial

Banks (SCBs) has decelerated sequentially in the first three quarters of FY 2024-25. Though credit growth moderated to 11.8 per cent in December 2024 from 12.6 per cent in quarter ending September 2024, all the population groups in rural, semi-urban, urban and metropolitan areas of the country maintained double digit growth.

The moderation in credit growth was largely on account of specifically personal loans, in housing, consumer durables and credit card; credit to agriculture and industry sectors also recorded some tempering in the growth. After rising by over 30 per cent in December 2023, personal loan growth has been on sequential downtrend almost halving to 15.2 per cent

YoY in September 2024 and further to 13.7 per cent YoY in December 2024, due to asset quality concerns and increase in risk weights on unsecured personal loans.

Going forward, it is expected that the system credit growth will remain in the range of 12-13 per cent. Deposit growth for the banking system is expected to be in the range of 9-11 per cent in FY 2025-26.

Indias monetary policy landscape in 2026 is expected to shift focus from navigating inflationary pressures to bolstering growth. Retail inflation in India, measured by the Consumer Price Index (CPI), fell to a remarkable 4.6 per cent in the fiscal year 2024-25, the lowest in 6 years. Further, the YoY inflation rate for April 2025 dropped to 3.16 per cent, marking the lowest monthly inflation rate since July 2019. This highlights the effectiveness of the Reserve Bank of Indias (RBI) monetary policy, which has successfully balanced economic expansion with price stability.

In its first Bi-monthly Monetary Policy meeting for FY26, the

Monetary Policy Committee (MPC) of the RBI reduced the repo rate by 25 basis points (bps) for the second time in a row. The Repo rate now stands at 6.0 per cent. The Central Bank also changed its stance from ‘Neutral to ‘Accommodative indicating increasing thrust towards strengthening demand and overall growth of the economy. Consequently, interest rates and yields across various instruments have started to ease. This coupled with a series of measures to ease liquidity, including a reduction in the Cash Reserve Ratio (CRR), increased frequency of Variable Rate Repo (VRR) auctions, Open Market Operations (OMO) purchases, 56-day

VRR auctions and USD/INR swaps are expected to foster a conducive environment for credit expansion going forward.

In the corporate sector, an uptick in investment, especially in infrastructure and manufacturing, will likely push demand for business loans. Banks, having strengthened their balance sheets in recent years, are expected to remain aggressive in lending, being aided by the governments continued focus on infrastructural growth and ease of doing business.

All the banks are expected to remain well capitalized in FY

2025-26 and some banks are expected to raise capital to meet the high credit demand. Banks net interest margins (NIM) are expected to come under pressure initially in FY 2025-26 as repo rate cuts will first bring down lending rates with a lagged reduction in deposit rates. On the asset quality front, keeping a close watch over lending practices, adopting robust underwriting standards, adhering to stricter risk assessment protocols will remain important. With the banks developing a Grameen Credit Score Framework, it will allow for a better assessment of the creditworthiness of borrowers in rural areas, potentially increasing lending opportunities and financial inclusion, especially for rural women and Self-help Groups. It is also expected to lower NPAs in microcredit due to data-driven lending models. Banks can capitalize on it to reach untapped borrowers and contribute to inclusive growth.

While the global economy is reeling from persistent geo-political shocks, the Indian economy remains relatively more insulated due to its large domestic market and limited reliance on foreign trade. While stringent trade policies are likely to shift global supply chains, India stands to benefit in the long run being one the most attractive investment destinations which also augurs well for the banking industry.

V. Segment-wise or Product-wise Performance

The performance of major business segments of the Bank is analyzed below:

1. Resource Mobilization

As on 31st March, 2025, Total Deposits stood at Rs.15.67 Lakh

Crore. CASA Deposits was at Rs. 5.74 Lakh Crore as on 31st

March, 2025 as against Rs. 5.52 Lakh Crore as on 31st March,

2024. a. Current Deposits was at Rs. 75,114 Crore as on 31st

March, 2025. b. Savings Deposits was at Rs. 4,98,429 Crore as on 31st

March, 2025.

The share of CASA deposit to Total deposit stood at 37.95 per cent as at end of March 2025.

2. Deposit Mobilisation Initiatives in FY 2024-25:

In the current banking scenario of mounting competition, Retail banking products play a major role in enhancing the business growth of the Bank. In view of this Bank has taken various initiatives in FY 24-2025:

a. Introduction of "PNB Palaash Green Deposit"

To promote sustainable practices and contribute to environmental preservation, Bank has introduced the "PNB Palaash Green Deposit." This interest-bearing term deposit enables funds collected from the public to be invested in projects aligned with green finance initiatives.

The scheme was launched to support the growing need for financing eco-friendly and sustainable projects, addressing global climate concerns and encouraging green investments.

b. Introduction of PNB "Start-Up" Current Account Scheme for Start-Up Businesses

India has become a hub for innovation and entrepreneurship due to government initiatives like "Start-up India," easy access to funding and the rise of technology-savvy young entrepreneurs. This scheme aims to foster a conducive business environment for start-ups by reducing banking hurdles and supporting their journey towards growth and innovation.

Recognizing the booming start-up ecosystem in India, Bank has introduced the "PNB Start-Up Current Account" to cater to the needs of budding entrepreneurs with tailored banking services on favorable terms.

c. Introduction of New Customer Relationship Management (CRM) Solution

In todays competitive banking environment, customer satisfaction and retention are pivotal. The CRM solution was introduced to provide seamless access to detailed customer insights, fostering stronger relationships and personalized services. Bank has rolled out an advanced CRM solution to elevate the banking experience for its customers by enhancing retention, acquisition and profitability.

d. Introduction of Lead Management Module in CRM Solution

As part of the new CRM solution, bank has launched the Lead Management module to provide a systematic approach to tracking and managing leads with an aim to improve sales and customer acquisition processes by ensuring every potential lead is effectively managed through a unified platform. This module simplifies lead handling by integrating multiple channels for lead generation and tracking.

3. Customer Engagement

Bank has implemented a Customer Engagement Program aimed at strengthening customer relationships and enhancing satisfaction. As part of this initiative, customers receive a personalized welcome message on activation of newly opened account, also details of products and charges are shared to ensure transparency. Furthermore, non-transacting customers are encouraged to initiate account usage.

Customer feedback on the account opening experience is actively gathered to identify areas for improvement. All these measures highlight banks commitment to customer-centricity, increased account activity and fostering a trust-based, mutually beneficial relationship.

4. Credit Deployment and Delivery

Gross Global Advances of the Bank stood at Rs. 11.17 Lakh Crore as on 31st March, 2025 registering a YoY growth of 13.6 per cent. Fresh Corporate Sanctions with external rating ‘A and above formed a major part of the sanctions.

The Banks CD Ratio has declined marginally to 71.3 per cent as on 31st March, 2025 from 71.8 per cent as on 31st March, 2024.

Two tier organisational structure of Corporate Credit is a specialised Credit Delivery Structure equipped with dedicated Credit desks ensuring consistent and responsible lending practices.

The structure is functioning to meet the customer expectation by augmenting three pillars viz; Customer Ecstasy, Timely delivery and Fair Lending Practices.

The 2 tier structure is being catered by 2 Extra Large Corporate Branches (ELCBs) and 13 Large Corporate Branches (LCBs) opened in different parts of the country.

These 15 ELCBs/LCBs constitute approx. 45.40 per cent of total domestic credit.

5. Retail Credit

The Retail Assets business of the Bank has consistently witnessed double-digit growth over the past 3 years. This strong momentum has been driven by improvements in the economic environment, a rising middle class, increasing urbanization, higher disposable incomes and technological innovations facilitating product dissemination. At the macro level, a competitive market landscape has further fueled this growth. Meanwhile, at the micro level, initiatives such as product differentiation, strategic marketing, digital channels for retail loans, specialized verticals and cross-selling opportunities have significantly contributed to the expansion of the Retail portfolio. Notably, delinquency levels have remained under control and have declined due to enhanced credit underwriting standards.

During FY 2024 25, the Banks Total Retail Credit portfolio grew to Rs. 2,59,363 Crore, registering a robust YoY growth of 16.5 per cent. Within this, the Core Retail Credit portfolio increased to Rs. 1,99,889 Crore, reflecting a YoY growth of 18.2 per cent.

Key segmental growth within the Core Retail Credit portfolio: a. Housing Loans grew to Rs. 1,16,312 Crore as on 31st March, 2025 from Rs. 98,293 Crore as on 31st March, 2024 (YoY growth: 18.3 per cent). b. Vehicle Loans increased to Rs. 26,056 Crore as on 31st March, 2025 from Rs. 20,767 Crore as on 31st March, 2024 (YoY growth: 25.5 per cent). c. Personal Loans rose to Rs. 23,281 Crore as on 31st March, 2025 from Rs. 22,493 Crore as on 31st March, 2024 (YoY growth: 3.5 per cent).

New Initiatives

The Bank has undertaken several initiatives to strengthen and expand its Retail Credit business:

i. Product Competitiveness: Continued offering of attractive product features and competitive interest rates across retail asset products.

ii. Focused Campaigns: Adoption of targeted campaigns and customer outreach programs to increase the share of home loans within the retail portfolio.

iii. Education Loan Focus: A distinctive strategy is being pursued to enhance the ticket size under the education loan scheme.

iv. Strengthened Partnerships: Expanded tie-ups with car dealers, home builders, marketing associates (MAs), marketing consultants (MCs), retail loan counsellors (RLCs) and increased use of property search portals to ensure a steady flow of quality retail loan leads.

v. PNB Cards & Services Ltd. (PNBCSL): The Banks subsidiary and centralized PNB Loan Point (PLP) continue to actively source home, car and education loan leads nationwide.

vi. Customer Acquisition Centres (CACs): 57 dedicated CACs have been established across the country to source retail loan leads and forge partnerships with corporate institutions and home builders.

vii. Government-Aligned Initiatives: Launch of schemes like PNB Pradhan Mantri Awas Yojana Urban 2.0, PM Vidyalakshmi, PM Surya Ghar scheme and Credit Risk

Guarantee Home Loan Scheme, promoting affordable housing and education under Government of Indias sponsorship.

viii. Youth-Focused Products: Introduction of PNB Yuva Ghar, PNB Yuva Vahan and PNB Yuva Sahyog schemes to address the credit needs of the aspirational youth segment (aged 18 35 years).

Digital initiatives

The Bank has aggressively expanded its digital offerings to enhance customer experience and streamline loan processes:

a. Existing Digital Products: The Bank offers Digital Home Loan, Digital Car Loan, Digital Education Loan, ODeFD and Pre Approved Personal Loan (PAPL). These digital journeys have shown promising traction, with total sanctions under digital products registering significant growth during FY 2024 25.

b. Upcoming Launches: New digital journeys for Digi Surya Ghar, Digi Two-Wheeler Loans and Digi Home Loan Top-Up are in advanced stages of planning and are expected to be launched soon. These initiatives are aimed at further improving customer convenience and boosting loan availment.

6. Priority Sector

Shouldering the responsibility of social banking, the Bank has surpassed all the Priority Sector goals this year. As per the National Statistical Office provisional estimates for FY 2024-25, the agriculture sector in India rebounded to a growth of 4.6 percent in FY 2024-25. Indias real GDP is estimated to grow by 6.5 percent in FY 2024-25. Growth in FY 2024-25 was supported by agriculture and services with rural demand on the back of record kharif production and favourable agriculture condition.

The outstanding position of Priority Sector, Agriculture and sub-sectors as on 31st March, 2025 on quarterly average basis is as under:

Achievement Of National Goals

(Amount in Rs. Crore)

		31.03.2025		%
Outstanding Position	No. of Accounts (Nos.)	(Amount) (Qtrly Avg. Basis)	PSL Target	Achievement to Adjusted Net Bank Credit (ANBC)
Priority Sector Credit	74,71,100	3,87,682	40.00%	40.36%
Out of which:
Loan to Agriculture Sector	53,02,864	1,73,676	18.00%	18.08%
Loan to Small & Marginal farmers	44,00,604	96,696	10.00%	10.07%
Loan to Micro enterprises	14,65,338	77,981	7.50%	8.12%
Loan to Weaker Sections	53,94,688	1,29,630	12.00%	13.50%

a. Performance Highlights of FY 2024-25

i. Credit to Priority Sector stood at Rs. 3,87,682 Crore as on 31st March 2025. The percentage of Priority Sector Advances to ANBC is 40.36 per cent as against the prescribed National Goal of 40.00 per cent. ii. Credit to Agriculture sector stood at Rs. 1,73,676 Crore as on 31st March 2025. The percentage of Agriculture Advances to ANBC is 18.08 per cent against the prescribed National Goal of 18.00 per cent. iii. Loans to Small/Marginal Farmers (SF/MF) stood at Rs. 96,696 Crore as on 31st March, 2025. The percentage of advances to SF/MF farmers to ANBC is 10.07 per cent as against the prescribed National Goal of 10.00 per cent. iv. Credit to Micro (PS) Enterprises stood at Rs. 77,981 Crore as on 31st March, 2025. The percentage of advance to Micro (PS) Enterprises to ANBC is 8.12 per cent as against the prescribed National Goal of 7.50 per cent. v. Advances to Weaker Section stood at Rs. 1,29,630 Crore as on 31st March, 2025. The achievement is 13.50 per cent as against National goal of 12.00 per cent of ANBC.

Government of India is taking various steps for the benefit of farmers from time to time. In the union budget 2025-26, GoI announced an increase in loan limits from 3 lakhs to Rs. 5 Lakh for loans taken through Kisan Credit Cards under modified interest subvention scheme which shall help in increasing the credit offtake under the scheme.

The Union Budget 2025-26 recognized Agriculture as 1st Engine of growth for economy. The Indian government has launched numerous schemes to support rural and agricultural development, aiming to improve farmers livelihoods and increase agricultural productivity. Significant credit offtake is observed under the schemes launched by Govt. of India like Agriculture Infrastructure Fund (AIF), Animal Husbandry Infrastructure Development Fund (AHIDF) and Pradhan Mantri Formalisation of Micro Food Processing Enterprises Scheme (PMFME) which has helped Banks in targeting and financing under various activities under Farm credit and pre & post-harvest management. All these schemes are part of Agriculture and Priority Sector and have helped in achieving Priority Sector targets also. In addition to this, various other programmes like National Rural Livelihood Mission (NRLM), National Urban Livelihood Mission (NULM) etc. are also helping in increasing the Priority sector advances.

b. Agriculture Infrastructure Fund (AIF)

To ensure certainty of returns to the farmers through price support, promote crop diversification and improve market infrastructure, Government is focussing on investment in infrastructure facilities through Agriculture Infrastructure Fund.

PNB has sanctioned 9172 projects amounting Rs. 7,061 Crore upto 31st March, 2025.

c. Prime Minister Formalisation of Micro Food processing Enterprises (PMFME) Scheme

The scheme aims to enhance the competitiveness of existing individual micro-enterprises in the unorganized segment of the food processing industry and promote formalization of the sector with the primary objective of increasing access to credit by existing micro food processing entrepreneurs, FPOs, Self Help Groups and Co-operatives. The Bank has sanctioned 3561 loans amounting to Rs. 282 Crore during the FY 2024- 25.

d. Initiatives

Envisaging enhanced growth of Agriculture segment with special focus on major products, Bank has taken following strategic initiatives: i. Creation of a dedicated SHG Monitoring Cell at the HO-Agriculture Division with a targeted approach to boost SHG portfolio. ii. Creation of dedicated Gold Loan Monitoring Cell at HO: Agriculture Division. iii. Creation of Tea Cell at Kolkata for enhanced focus on Tea business. iv. Identification of 1000 Agriculture Intensive branches and posting of dedicated Agriculture Officers in these branches for sourcing of business. v. Following new schemes have been launched during FY 2024-25:

• PNB Bhandaran: Scheme for financing against Physical Warehouse Receipts (WHR) for our existing borrowers.

• PNB Coldware Secure: Scheme for financing to Cold Storage/Warehouse Solutions.

• e-Godam: Scheme for financing against pledge of Electronic Negotiable Warehouse Receipts.

• NRLM Shreshtha: To empower women members of NRLM sponsored SHGs by facilitating access to funds for entrepreneurial activities, Bank has launched NRLM SHG Shreshtha Scheme under Lakhpati Didi Initiative.

e. Strategies:

Agri-Ancillary & Agri-Infrastructure

i. Under the concept, activity-based clusters are identified as per the potential and geographical area and customers are provided with tailored credit offerings to meet the specific needs of industries under these clusters and benefits like concession in interest rate, processing fee, upfront fee, relaxation of requirement of external rating, collateral security etc. are being provided.

ii. We have approved 56 Clusters under Agriculture Segment. During the FY 2024-25, we have sanctioned Rs. 1672 Crore under active clusters for Food & Agro Processing and Cold Storage Units. More clusters are being identified based on the activity and potential in specific geographical locations.

Financing to Self Help Groups

i. SHG Monitoring Cell at H.O. has been set up to increase lending under NRLM scheme with focused monitoring through HO.

ii. Dedicated Nodal Officers have been appointed for driving, reviewing and monitoring the business performance in high-potential states.

iii. Credit linkage of new eligible groups and providing higher dosage to eligible accounts is the focus area for increasing our SHG portfolio. We are also aiming to increase the average ticket size of SHG loans which is Rs. 2.25 lakh at present. The Bank has 4,45,616 SHG loan accounts with outstanding of Rs. 10,801 Crore as on 31st March, 2025. In line with government initiative, new scheme of Lakhpati Didi has been formulated. The Bank has sanctioned 2,278 accounts amounting to Rs. 29.64 Crore till March25 under this scheme.

iv. For boosting SHG financing, we have executed tie ups with State Rural Livelihood Mission (SRLM) in the States of Assam, Bihar, Punjab, West Bengal, Odisha, Chhattisgarh, Uttar Pradesh, Maharashtra, Tripura and Kerala for sponsoring applications to our Bank.

v. The Bank has launched digital journey for financing to SHGs which shall help in improving the credit offtake under this segment.

vi. Service charges under NULM for loans upto Rs. 20 Lakh have been waived to make scheme more attractive.

vii. A SHG centric credit outreach programme was organized on 01-03-2025 wherein 49,540 leads were generated amounting to Rs. 2556 Crore.

Financing under Agri-Gold Loan

i. The Bank is planning to increase our authorized branches in Rural and Semi-urban areas to boost financing under the Scheme.

ii. The Bank has increased the limit of digital gold loan journey from Rs. 2.00 Lakh to Rs. 10.00 Lakh which shall help in improving the credit offtake under the scheme.

iii. Various modifications in the Scheme have been made during last 2 years which has helped in improving our Agri Gold Loan portfolio. iv. The Bank is focussing on further improving credit offtake under the scheme while ensuring compliance of all the regulatory guidelines.

Farm Mechanization i. The Bank has simplified the process of approval for Tractor/ Combine Harvester models by doing away with requirement of model testing report of Tractors/ Combine Harvesters. ii. The Bank had approved more than 80 Tractors/ Combine Harvester models during FY 2023-24. After the modifications in the model approval process which was implemented w.e.f. 22.10.2024, more than 200 Combine Harvester and Tractor Models approved for financing by the Bank. iii. The Bank is establishing partnerships with farm-machinery companies to generate leads and expand offerings for untapped farmers.

Digital Offerings: To streamline operations and provide customers a seamless experience, the Bank is offering following digital products under Agriculture Segment:

i. Kisan Tatlkal Rin for Farmers ii. Digital Gold Loan

iii. KCC DP review and enhancement

iv. Digital E-Godam (finance against eNWR).

v. Digital journey for financing to SHGs.

In addition to the above, following digital journeys are under customisation:

vi. Digital Journey for financing Tractors. vii. Digital Journey for financing under KCC Dairy scheme.

Corporate Social Responsibility (CSR) Activities

i. Farmers Training Centres (FTCs):

The Bank has established 12 Farmers Training Centres. FTCs provide training on agriculture & allied activities which include organic farming, fertilizer management, bee keeping, dairy farming, mushroom production, maintenance of tractor and other farm machineries, processing and preservation of fruits and vegetables, computer courses, beauty parlour, candle and soap making, papad making, making of soft toys, cutting, tailoring & embroidery, etc. These Training Centres have been equipped with the Mobile Van and LED for audio visual display of informative video clips to the farmers. During FY 2024-25, 1,04,155 persons were trained in these centres. Out of which 49,205 were women. Since inception, FTCs have imparted training to 19,32,179 persons by conducting 65,062 training programs. The Bank spent Rs. 10.02 Crore under this during FY 2024-25.

ii. Rural Self Employment Training Institutes (RSETIs):

There are 78 RSETIs under aegis of Ministry of Rural Development (MoRD) and 2 Rural Development Centres (PNB initiatives) operating in India which are engaged in providing training to rural population and their families for skill upgradation to undertake self-employment ventures/ jobs. During the FY 2024-25, 79,989 persons were trained in these centres, out of which, 65,636 belong to Below Poverty Line (BPL) families and 63,535 were women. Total number of trained candidates since inception is 6,82,671, out of which 3,55,307 were from BPL families and 4,66,580 were women. Our RSETIs are focusing for settlement of participants by ensuring adequate credit for inclusive growth. Total settled candidates are 4,74,977 since inception. The Bank spent Rs. 67.67 Crore under this during FY 2024-25.

ii. Financial Literacy Centres: The Bank has 175 Financial Literacy Centers (FLCs). The Target groups of the programmes conducted by FLCs are Farmers, Self Help Groups, Micro and Small Entrepreneurs, Senior Citizens etc. Total number of seminars/programmes/camps conducted by FLCs on Financial Education, Preventive Counselling and Customer Rights from 1st April, 2024 to 31st March, 2025 is 10,514 and number of persons attended these programs are 3,72,369.

7. Micro, Small and Medium Enterprises (MSME)

As on 31st March 2025, credit to MSME segment stands at Rs. 1,62,693 Crore. The advance to Micro and Small Enterprises stood at Rs. 1,34,077 Crore with outstanding in Micro segment at Rs. 79,695 Crore.

Mudra: The Bank has disbursed Rs. 21,236 Crore in FY 2024-25 under the Pradhan Mantri MUDRA Yojana (PMMY).

a. Details of initiatives being taken to boost MSME business

i. Cluster Based Financing: The Bank has adopted the Cluster based lending approach and 60 clusters are there with customized schemes having concessional pricing, service charges, relaxed lending norms, etc.

(Amt. in Rs. Crore)

Position As on	31.03.2025
Sanctioned A/c	2331
Sanctioned Amt	6278

ii. Lending through TreDS Platform: The Bank is using three platforms of TReDS, i.e., (1) RXIL (2) M1xchange & (3) A.Treds. TReDS is an institutional mechanism set up for financing of trade receivables of MSMEs from corporate and other buyers including Government Departments and Public Sector Undertakings (PSUs). (Amt. in Rs. Crore)

Position As on	31.03.2025
No. of A/c	3358
Outstanding Amt	1629

iii. Cash Flow based Financing-GST Express- The scheme provides hassle free credit to meet working capital requirement to GST registered business enterprises. Unique feature of the scheme is that there is no requirement of submitting financial statements and the quantum of loan permitted is above Rs. 10 Lakh to Rs. 500 Lakh.

(Amt. in Rs. Crore)

Position As on	31.03.2025
Sanctioned A/c	18314
Sanctioned Amt	13209

iv. e-GST Express - The module is a ‘near to STP product having loan amount from Rs.10 Lakh to Rs.1 Crore, wherein Cash Credit Facility shall be allowed based on 25 per cent of the sales reported in the GST returns (GSTR-

3B) or the trade related credit summation in current accounts in the last one year (last 12 months) whichever is lower.

	(Amt. in Rs. Crore)
Position As on	31.03.2025
Sanctioned A/c	1029
Sanctioned Amt	278

v. MSME Prime Plus: A flag ship scheme under the name of MSME Prime Plus has been launched by consolidating four MSME schemes namely; PNB Udyog Scheme, PNB Seva Scheme, PNB Vyapar Scheme and PNB Contractor Scheme. To be more competitive and acceptable in the market, Bank is offering-

• Concessional Rate of Interest and Service Charges,

• Relaxed collateral norms and margin criteria

• Features like MSME Vishesh (Auto increase of Working Capital Limits)

Open Term Loan (A pre-approved term loan facility which provides flexibility to the good existing units enjoying credit facilities from our Bank) and

• Car Loan in the Name of Firm/Company for Personal use.

(Amt. in Rs. Crore)

Position As on	31.03.2025
Sanctioned A/c	39593
Sanctioned Amt	61875

vi. PNB Trade Growth – The scheme provides hassle free loan above Rs. 10.00 Lakh to Rs. 1.00 Crore at concessional rates as no financial papers are required for assessment. The assessment is done on the basis of GST return or Credit summation in account. Apart from that various concessions are also provided in the scheme.

(Amt. in Rs. Crore)

Position As on	31.03.2025
Sanctioned A/c	12936
Sanctioned Amt	4959

vii. Digi MSME Loan: This module is a straight through digital lending to MSME segment to provide loan facility above Rs.1 Lakh to Rs. 25 Lakh under Business loan to those customers who are maintaining current account with us and it will be completely system driven. Loan assessment will be based on trade related credits (TRC) arrived in current accounts through credit summation in last 12 months and the Pre Approved Business Loan (PABL) Score. Keeping in view of the success of PAPL, it is expected to garner a good number of business under this module.

(Amt. in Rs. Crore)

Position As on	31.03.2025
Sanctioned A/c	15238
Sanctioned Amt	927

viii. Easy-Renewal Scheme- To increase efficiency of the appraisal process, reduce TAT and to provide ease to small borrowers, Easy renewal has been implemented where customer will give his/her consent through SMS only and the entire journey will be completed digitally without any Branch involvement.

	From 01.04.2024 to 31.03.2025
Segment	No. of A/c	Amt. in Crore
Easy Renewal	100930	4769

8. GOVT. SPONSORED SCHEMES

a. PM Street Vendors AtmaNirbharNidhi (PM SVANidhi):

This is a Central Sector Scheme launched by Ministry of Housing and Urban Affairs formalized for Street vendors providing finance upto Rs. 10,000 which opened up new opportunities for this sector to move up the economic ladder. The scheme was launched on 02.07.2020 and it is available to all street vendors engaged in urban areas as on or before March 24, 2020. Credit Guarantee and interest Subsidy claims on all loans will be paid till March 2028.

In addition to this, Ministry of Housing and Urban Affairs has extended the benefit of existing scheme to provide enhanced loan (2nd tranche of Rs. 20,000 and 3rd tranche of Rs.50000) to PM SVANidhi beneficiaries on timely repayment of earlier loan under PM SVANidhi Scheme.

(In Numbers)

Position As on	31.03.2025
Application Sanctioned	7,44,009
Application Disbursed	7,41,187

b. e-PM SVANidhi- To make the PM SVANidhi loan more flexible and easily accessible to all eligible urban street vendors, "e-PM SVANidhi" scheme is launched for all applicants who are having KYC complied saving and current account with bank based on Aadhar/Pan available in CBS. Under the scheme the loan is sanctioned without any manual intervention and the amount is disbursed directly into the saving/current account of the borrower.

(Amt. in Rs. Crore)

Position As on	31.03.2025
Sanctioned A/c	45,569
Sanctioned Amt	49

c. PM Vishwakarma - PM Vishwakarma was launched on 17th September, 2023, is a holistic scheme that envisages to provide end-to-end support to the artisans and craftspeople.

The scheme initially started with Bank account verification of the PM Vishwakarma beneficiary wherein the banks were required to verify the Bank account details of the beneficiary uploaded on the PMV Portal. It is an ongoing process since the beneficiaries are on boarded on the PMV portal on daily basis.

The position of the Bank as on 31st March, 2025 is as under: (In Numbers)

Bank Account verification received	Bank Account details verified	Bank Account details rejected	Bank Account details pending	% Pendency
19,70,617	16,17,803	2,90,570	60,333	3%

As per the instruction of National Steering Committee, DFS vide email dated 25th April, 2024 has informed that the functionality to sanction and disburse the application on the portal has been made live w.e.f., from 24th April, 2024 and banks can sanction & disburse the loan application received on the portal. The position of the Bank as on 31st March, 2025 is as under:

Application received	Application Processed (i.e, Sanctioned + Rejected)	Application Sanctioned	Application Rejected	Application Disbursed	Application Pending
85,952	75,274	32,683	42,591	30,701	10,678

Banks position as on 31st March, 2025 under the credit component of the scheme

Loan sanctions: 32,683 applications, totaling Rs. 316.50 Crore.

Loan disbursements: 30,701 applications, totaling Rs. 296.43 Crore.

d. e-PM Vishwakarma - As a part of digital initiative and to reduces the complexities, the Bank has launched e-PM Vishwakarma - an end to end digitized journey on 25th July 2024. Till 31.03.2025, 21,045 applications amounting to Rs. 206.57 Crore. have been sanctioned through Digital Channel under the scheme.

e. Other Initiatives i. Field-level strategic initiatives have been introduced to augment MSME Business. The Bank has 1000 MSME intensive branches. Branches have been identified as the focal point for accelerating MSME lending through focused approach. These branches shall be supported through direct involvement of Marketing Officers (MOs) for MSME marketing & lead creation. MOs shall assist in sourcing business leads, canvassing quality advances and boosting MSME credit.

ii. Customer Acquisition Centres (CACs) have been set up on customer centric approach by way of conducting extensive research & market study to understand the customer preferences and develop products & services along with marketing strategies. MSME Business Loans Segment have been segregated in CACs for sourcing business loans above Rs.10 Lakh with primary focus on MSME.

iii. The Lead Management Module is designed to handle

MSME leads effectively, providing a structured process for lead creation, processing and closure. This module integrates various channels such as branches, Customer Care, e-mail, SMS, Internet & Mobile Banking, ensuring comprehensive lead management.

iv. MSME Outreach campaign has been launched by the Bank at 190+ locations. Under the outreach programme 15,743 number of leads amounting to Rs 23,652 Crore has been received. Out of which 5092 number of leads amounting to Rs 5353 Crore have been sanctioned.

9. Financial Inclusion (FI)

The Bank has been the pioneer in taking initiative in the area of financial inclusion. The Bank is providing Business Correspondents (BCs) services since 2012 & implementing comprehensive Financial Inclusion Program through effective utilization of BCs in Sub-Service Area (SSA) & non SSA area.

SSA is a cluster of few villages and is linked to one base branch of the Bank.

Some of the FI initiatives include: a. The Bank has implemented Pradhan Mantri Jan Dhan Yojana (PMJDY) and other financial inclusion initiatives through BCs Pan-India. Overdraft facility up to Rs. 10,000 in PMJDY accounts is provided to eligible account holders (age group 18-65 years). b. Biometric based e-KYC account opening and Aadhaar seeding at BC Locations. c. Social Security Schemes (SSS), i.e. Pradhan Mantri

Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri

Suraksha Bima Yojana (PMSBY) and Atal Pension Yojana (APY) facilities, are available at BC locations, branches, as well as through Internet Banking/Mobile Banking. The Progress of active Social Security Schemes (SSS) till 31st March, 2025 is as under: i. PMJJBY: 73.08 Lakh customers enrolled. ii. PMSBY: 291.97 Lakh customers enrolled. iii. APY: 46.81 Lakh customers enrolled. d. As on 31st March, 2025, the Bank has 33,349 BC Agents/

Bank Mitras providing basic banking services in Rural,

Semi-Urban, Urban and Metro centres. The BC Agents /

Bank Mitras use PAX /Laptop /Desktop etc. for providing the banking services. At present following services as per EASE agenda of Department of Financial Services (DFS) are available at BC locations through Kiosk Banking Solution: i. e-KYC Account Opening. ii. Term Deposit Receipt (TDR)/ Recurring Deposit (RD) opening, Renew TD/RD. iii. Cash Deposit (own bank / other bank). iv. Cash Withdrawal (own bank / other bank). v. Fund transfer (own bank), Fund transfer (other bank - Aadhaar Enabled Payment System {AEPS}). vi. Immediate Payment Service (IMPS), National Electronic

Funds Transfer (NEFT), Indo-Nepal Remittance. vii. Balance enquiry (own bank / other bank). viii. Apply for RuPay debit cards, Block debit card. ix. Enrollment for social security schemes i.e. micro accidental death insurance (PMSBY), micro life insurance (PMJJBY), pension scheme (APY). x. Aadhaar Seeding.

xi. Self Help Group (SHG): For formation & promotion, including credit linkage. xii. Passbook update, Mini statement. xiii. Cheque collection. xiv. Request new cheque book, Stop payment of cheque, cheque status enquiry. xv. Request for SMS alert / email statement (registered mobile number/e-mail). xvi. Recovery/Collection up to bank approved limits. xvii. Loan request initiation for Retail/Mudra/Agriculture. xviii. Request initiation for Current account opening. xix. Request initiation for Third Party Products.

VI. Risks & Concerns

Risk is integral part of the Banks business operations. The Bank is exposed to major risks namely credit risk, market risk, operational risk, liquidity risk, interest rate risk, among others and has put in place measures, policies, systems and procedures to manage and mitigate those risks. The Bank also has a reliable internal controlling environment to manage materials risks such as Reputational risk, Strategic Risk, IT Risk, Cyber Risk, Compliance Risk, ESG Risk, Climate Risk, Conduct Risk and other residual risks. The Board of Directors of the Bank has constituted various Sub-Committees of Board and/or Functional Committees to look into different areas of strategic importance.

1. Credit Risk Management

The Bank has a robust Credit Risk management framework and has developed comprehensive risk scoring/rating system that serves as a single point indicator of diverse risk factors of counterparties for taking credit decisions in a consistent manner. The Bank has in-house credit risk rating models for risk assessment of borrowers and has also developed and implemented scoring models for Retail advances, MSME and Farm sector advances credit scoring models to capture the peculiarity of specific lending schemes designed for a particular segment such as PNB Sampatti, PNB GST express loan, Pre-Approved Personal Loan scheme, e-Mudra and lending under co-lending arrangements with NBFCs.

The Bank undertakes periodic validation exercise of its credit risk rating and scoring models to ensure their efficacy. The

Bank also conducts migration and default rate analysis to test robustness of its credit risk rating models. Output of credit rating and scoring models is linked to decision making which includes credit sanctioning, pricing, loaning powers alongside audit, review & monitoring of credit portfolio. The Bank has put in place several policies covering various aspects of credit risk management to have a uniform set of effective lending practices.

In pursuance of overarching objective of automation of processes and increased compliance, the Bank has launched various digital retail lending products targeting different customer segments. These products are based on rule-based, system driven processing & sanctioning, which shall be end-to-end or near end-to-end. Separate scorecards have been developed to assess the risks for these products.

The Bank has also launched E-Renewal Scheme, an automatic/

Straight Through Process (STP) for renewal of credit facilities for working capital credit facilities having exposure up to a certain threshold.

The Bank has in place a fully digitized and automated Early

Warning monitoring tool ‘PNB SAJAG 2.0 for effective monitoring of advances above Rs. 1 Crore and early detection of deterioration in health of loan accounts. The system monitors the accounts on 133 Early Warning Signals (EWS) - including all EWS prescribed by Reserve Bank of India (RBI) and Department of Financial Services (DFS).

The Bank has established a separate Industry Research Desk under Credit Intelligence and Support Department (CIaSD), which carries out in-house risk assessment of industries and prepares industry outlook for more than 160 industries based on calculated industry risk scores. Output of industry risk assessment exercise is translated into Industry Handout which presents executive summary and brief of various industry risk parameters. Further, Up, Stable and Down Quarterly trends in Industry Outlook is also provided by encapsulating significant developments in industries during the quarter.

These processes help to achieve quick & accurate delivery and monitoring of credit, bring uniformity in the appraisal and facilitate storage of data & analysis thereof.

2. Market risk and Asset Liability Management

The Bank has in place a well-defined organizational structure for market risk management which looks into the process of overall management of market risk viz. interest rate risk, equity price risk and foreign exchange risk and implements methodologies for measuring and monitoring the risks to keep the investment portfolio healthy and liquid.

Mid-office of Treasury Operations, looks after market risk of the investment Portfolio of the Bank and reports to Group

Chief Risk Officer (GCRO) to ensure the independence of its functioning from treasury operations. Further, Market Risk Management Committee (MRMC) a functional committee is also in place to look after the overall management of Market Risk.

Mid Office monitors various risk positions through statistical tools like VaR, stress tests, risk limits like M-Duration, PV01, exposure limit etc. to effectively manage the Investment portfolio. In order to make the monitoring robust and system driven, tools/limits have been automated in Finacle treasury application for better monitoring and management of Market Risk. Further, in order to incorporate the impact of riskiness of exposure in different countries, Country Risk Premium has been incorporated in the pricing structure for effective pricing.

The Bank has a separate Asset Liability Management Cell that manages and monitors liquidity risk and interest rate risk proactively. To assess liquidity risk for short term resilience, the Bank computes and monitors Liquidity Coverage Ratio (LCR) on daily basis. For long term resilience, the Bank computes and monitors Net stable Funding Ratio (NSFR) on monthly basis.

The Bank keeps a close eye on development in the global markets and scans its portfolio on regular basis to protect itself from similar kind of risk incidents. The Bank carries out detailed stress testing for liquidity risk on quarterly basis. Stress test is a tool that helps in assessing the Banks liquidity profile and the adequacy of liquidity buffers in case of bank-specific, market-wide and combined stress events. Stress test is conducted using severe but plausible scenarios and its impact on liquidity position is assessed under low, medium and high stress scenarios. Similarly, the Bank also conducts liquidity stress test and impact on LCR, followed by preparation of Contingency Funding Plan to tide over liquidity crunch if at all it arises. The Bank manages its assets on a continuous basis in a way to withstand liquidity requirements at all times.

The Bank also computes and report Interest Rate Risk in Banking Book (IRRBB) to RBI on quarterly basis. IRRBB refers to current and prospective risk to banks capital and earnings arising from adverse movement in interest rates that affects its banking book position.

The Bank has automated its liquidity reporting. All the liquidity & Interest rate risk related reports such as LCR, NSFR, SLS, TGA, DGA etc. are being generated from LRM and ALM modules, significantly which has improved the reporting process. The system-based liquidity reporting allows Bank to identify potential liquidity risks and triggers, for timely intervention and mitigation.

3. Operational Risk Management and IT Risk

The Bank has in place a well-defined organizational structure and framework for operational risk management functions. The Bank is identifying, measuring, monitoring and controlling/ mitigating the operational risk through tools viz. Internal/ External Loss Data, Incident Reporting, Near Miss Events,

Risk Control & Self-Assessment surveys (RCSAs), Key

Risk Indicators (KRIs), Risk Based Assessment for Money Laundering & Terrorist Financing Risk and Scenario Analysis. The Bank has a robust mechanism in place to analyse the operational risk in product/activities/process/services and systems before introducing/modifying existing processes through approvals at various levels. The Bank has in place sound and responsive practices to ensure effective oversight, due diligence and management of risk arising from outsourcing of financial services along with Business Continuity Plan that leads to readiness in tackling serious business disruption. The Bank has implemented Statistical Analysis Software (SAS), an online Operational Risk Solution under Enterprise-wide Data

Warehouse Project and placed it on central server to take care of various aspects of data capturing and management information system at various levels to provide technological support for managing entire Operational Risk of the Bank.

The Bank has newly established IT and Information Security

Risk Management vertical under risk function for effective IT and information security risk management bank wide. The Op Risk solution portal has been established for incident management in the Bank, wherein any employee of the bank can lodge the operational risk incidents in the portal.

Further, Third-Party Risk Management Cell under Operational

Risk function has been established to have comprehensive management of third-party risk in the Bank

The Bank has newly established IT and Information Security

Risk Management vertical under risk function for effective IT and information security risk management bank wide.

The Bank has in place a comprehensive IT and Information Security Risk Management Framework to identify, assess, monitor and mitigate IT risk. A well-defined Incident Escalation

Matrix is in place to enable internal oversight, facilitate effective response mechanisms. The Bank is identifying, measuring, monitoring and controlling/mitigating the IT Risk through several activities viz. periodical Risk assessments for critical and significantly important applications, evaluating the inherent risks of third-party IT service providers.

4. Internal Capital Adequacy Assessment Process (ICAAP) & Stress Testing

The Bank has in place a comprehensive policy on Internal Capital Adequacy Assessment Process (ICAAP), which is reviewed annually and ICAAP document is put up to the Board on half yearly basis. ICAAP addresses both the Pillar-I and Pillar-II risks and to have a holistic view of impact of various risks which the Bank is exposed to and an exercise is carried out to quantify/assess all such risks. The risk management processes are covered at length in the ICAAP document. The document is prepared on both solo and consolidated basis at the group level. The Bank also has put in place comprehensive Policy on Stress Test to identify the vulnerabilities and assess capital/ liquidity requirements under adverse but plausible scenarios. Stress tests are conducted across whole gamut of risks namely Credit risk, Market risk, Operational risk, Concentration risk, IRRBB, Liquidity risk, Country risk, Group risk, Pension Obligation risk, etc. on a regular basis. The Bank has recently upgraded the stress testing framework to make the estimates more accurate, forward looking and granular. The retail and MSME portfolios have been further segregated into 1,000+ risk homogeneous micro clusters (based on account characteristics, demographics etc.) and linked with macro-economic variables.

5. Risk Appetite Framework

The Bank has a comprehensive Risk Appetite Framework in place. The Framework sets out the Risk Appetite Statement along with governance and monitoring mechanism for its effective implementation within the Bank. Risk Appetite has been defined in terms of different key risk parameters along with the Risk limit and Risk threshold level for each parameter. Actual risk levels are monitored against the approved limits on an ongoing basis.

6. Group Risk

Risk Management at Group Level is to manage the risks of the Bank as part of the group and assess the potential impact of other group entities on the overall risk profile of the Bank. The

Bank has group risk governance framework/structure which is based on pyramid approach, starting with Group Risk Policy at top and progressing through risk appetite, governance, processes and risk reporting. The Bank has formed a Group

Risk Management Committee for effective management of group risk. The Bank has a strong Group Risk oversight of all the group entities, including the group risk assessment of Subsidiaries, Associates and Joint Venture (JVs), Impact of stress testing of subsidiaries and overseas branches on consolidated level, Liquidity Risk Management through Group Liquidity Coverage Ratio (LCR), Consolidated Prudential Report (CPR), Prudential limit and Contingency Funding Plan (CFP). Further Group ICAAP is prepared to assess the various risks (both Pillar I and Pillar II) the group is exposed to, mitigation of these risks and to arrive at an internally computed level of capital adequacy consistent with these risks.

7. Climate Risk

Climate-related risks refer to the potential challenges that may arise from climate change or from the measures undertaken to mitigate its effects, along with the resulting economic and financial consequences. These risks can impact the financial sector primarily through two channels—physical risks and transition risks. Physical risks encompass the economic costs and financial losses resulting from the increasing frequency and severity of extreme weather events, long-term gradual shifts in climate and indirect effects such as the degradation of ecosystem services. Transition risks, on the other hand, emerge from the process of shifting towards a low-carbon economy, including changes in policy, legal frameworks, technology and market dynamics.

To accelerate efforts in this critical area, the Bank has in place a dedicated Climate Risk Management Cell, tasked with implementing a structured plan focusing on four strategic areas: Net Zero ambition, risk management, operational integration and climate risk governance. To strengthen the oversight and coordination of sustainability initiatives, the Bank has also constituted a Sustainability and Resilience Committee (SARC). Furthermore, the Bank has adopted a Green Deposit Policy. It has also established a Financing Framework for

Green, Social and Sustainability-Linked Activities/Projects, which has undergone an external review, along with a Green

Bond issuance Framework to support its sustainable financing objectives.

The Bank has significantly enhanced its internal capabilities for managing climate-related risks. A comprehensive physical risk assessment has been conducted across the entire lending portfolio to understand the vulnerability of underlying assets. In parallel, a transition risk assessment of borrowers has been carried out by capturing their carbon emissions data, including Scope 1 and Scope 2 emissions. The Bank has implemented a robust Greenhouse Gas (GHG) measurement framework based on the internationally accepted GHG Protocol, along with a methodology for calculating financed emissions in alignment with the Partnership for Carbon Accounting Financials (PCAF) standards. In addition, a qualitative climate risk strategy has been formulated, taking into account global best practices in climate risk management.

In line with global standards, the Bank has introduced a dedicated Climate Risk Management Policy that incorporates the four pillars outlined by the Task Force on Climate-related

Financial Disclosures (TCFD)—Governance, Strategy, Risk Management and Metrics & Targets. As part of its borrower support strategy, the Bank has also developed a structured client engagement approach to assist in their decarbonisation journey. In the first phase of this initiative, the Bank released a Client Engagement Handbook designed to equip credit officers with practical tools and insights to help borrowers better understand climate-related requirements and adopt actionable sustainability measures. The Bank has drafted a Carbon Neutrality Plan, with roadmap for reducing Scope 1 and Scope 2 emissions, with a target year of FY 2031.

The Bank continues to invest in capacity building on climate risk across all levels of the organization. It has successfully computed Scope 1, Scope 2 and Scope 3 emissions for FY

2022 23 and FY 2023 24, with these details disclosed in the BRSR report for FY24. Demonstrating leadership in climate transparency, the Bank has become a member of PCAF and is the first Indian bank to commit to disclosing Scope 3 emissions under Category 15 (Financed Emissions) as part of its membership obligations. Additionally, the Bank has disclosed climate-related data on the CDP platform for FY 2023 24 and received a rating of "C: Awareness." This disclosure not only meets the expectations of stakeholders for transparency but also enables the Bank to benchmark its environmental performance against industry peers.

Despite these advancements, the Bank continues to face several challenges, including the limited availability of India-specific data, the absence of a standardized Indian taxonomy for green insufficient activities and evidence regarding the commercial viability and returns potential of emerging green sectors. Nonetheless, the Bank remains committed to addressing these constraints while advancing its climate risk management agenda.

a. Regulatory Guidelines

The Bank has adopted Standardized Approach for Credit Risk, Standardized Duration Approach for Market Risk and Basic Indicator Approach for Operational Risk for computation of Risk Weighted Assets (RWA) under Basel III norms. The Bank also plans to migrate to advanced approaches for computation of RWA/Capital charge for Credit, Market and Operational Risks subject to approval from the regulator. The Bank is calculating & reporting its capital and RWA as per Foundation Internal Ratings Based (FIRB) to RBI on quarterly basis. The Bank has submitted a formal Letter of Intent for adoption of Advanced Internal Rating Based (AIRB) Approach for Credit Risk and Internal Models Approach (IMA) for Market risk. Necessary actions required in this regard have been initiated.

The Bank is calculating Expected Credit Loss (ECL) as per

Indian Accounting Standard (Ind AS)-109 on quarterly basis and the results are submitted to RBI in prescribed Proforma on half-yearly basis. Further, Bank is in process of automating the entire ECL calculation and reports through vendor-based solution.

The Bank has developed Risk Adjusted Return on Capital (RAROC) framework which provides the Bank with a single scale for comparing the return on capital for a credit proposal to enable credit decisions. The framework helps in assessing whether returns generated by the business proposition are commensurate with the risk perceived, thereby maximizing the value of shareholders equity.

8. New Initiatives taken during FY 2024-25 are as under a. Operational Risk i. To strengthen & streamline the Incident management in Bank, a portal namely Op Risk solution has been made live wherein any employee of the bank can lodge the operational risk incidents in the portal. Incentive schemes are also prescribed to encourage the reporting of operational risk incidents so that mitigating measures can be implemented in time to avoid loss to the Bank. ii. To have a comprehensive third-party risk management in the Bank and to align with RBI guidance note on operational risk & operational resilience, Third-Party

Risk Management Cell has been established under Risk function. iii. To enhance operational resilience and Business Continuity Planning in the Bank, Executive Director headed Business Continuity and Operational Resilience Committee (BCORE) has been established. b. Credit Risk i. The Bank has automated the process of identification of stressed industries and computation of additional provisions therein. ii. Credit risk Measurement techniques were enhanced by developing revised and advanced frameworks for measurement of credit risk parameters. c. Policy i. A new scheme was formulated for ‘Financing to Start-Ups which was conveyed vide IRMD L&A circular no. 44/2024 dated 09.04.2024. d. IT Risk i. Incident Escalation Matrix for comprehensive mechanism to have internal oversight and effective control to build resilience has been issued.

ii. RCA (Root Cause Analyses) specification for effective and detailed disclosure of IT related BDSF incident has been circulated. iii. Risk assessment of IT Vendors/ Third Parties through

Risk scoring of Third-Party vendors prior to on-boarding and performance review on yearly basis for outsourcing of IT services. iv. Introduction of a new metric System Restoration Time

(SRT) for BCP (Business Continuity Plan)/ Disaster Recovery Plan (DRP). The SRT metric will help us to monitor and improve our disaster recovery capabilities and ensure minimal downtime. e. ALM i. The Bank has adopted Internal Liquidity Adequacy Assessment Process (ILAAP) comprehensive framework to identity, measure, monitor, forecast and manage the liquidity position under normal and various stress scenarios. ii. Automation of LCR and NSFR reports.

VII. Cyber Security Centre of Excellence (CCoE)

The Bank places a strong emphasis on cybersecurity, with oversight provided by the Group Chief Information Security

Officer (GCISO) and execution managed by the dedicated

Cyber Information Security Division (CISD). It is looking after the entire cybersecurity lifecycle, from the implementation and deployment of controls to continuous monitoring, ensuring robust protection of the IT infrastructure against a wide range of cyber threats. To reinforce our defences, the Bank keeps upgrading its cybersecurity components. These efforts are complemented by a dedicated Cybersecurity Compliance Team, which ensures strict adherence to regulatory mandates. The Attack Surface Management (ASM) program plays a key role by providing continuous identification and remediation of vulnerabilities in public-facing applications.

Key initiatives include aggregating various threat intelligence feeds into a Threat Intelligence Platform and integrating it with the Cyber Security Operations Center (CSOC) to enable proactive threat prediction and management. An independent second line of defence is provided by the Information and Communication Technology Risk function, ensuring a balanced risk management approach. Further independent assurance is offered by the Internal IS Audit team within the Audit and Inspection Department. The Banks commitment to security is further demonstrated by our achievement of PCI DSS 4.0 certification, in addition to our existing ISO 27001:2022 certification.

The PSB Cybersecurity Hackathon 2024-25, themed "Code Against Malware," a national-level initiative conducted under the directives of the Department of Financial Services (DFS) and the Indian Banks Association (IBA), in collaboration with IIT Kanpur. This hackathon aims to foster innovation in malware detection and cyber defence, bringing together bright minds from across the country to develop advanced, scalable solutions that strengthen the cybersecurity posture of the banking sector and beyond.

VIII. Physical Security

The Bank has well established security and fire safety set-up with clear-cut delegation of authority and responsibility to the Security Organization functioning at Head Office and at the field level.

Security Organization functions through various instructions/ guidelines which are consolidated in the form of Physical Security Policy and Fire Safety Policy. Security Organization ensures physical safeguarding of the Banks asset, its fire safety arrangements and safety of its staff/customers.

All the Banks branches are strengthened with the latest security and fire safety gadgets such as Closed-Circuit

Television (CCTV) System, Burglar Alarm System, Fire Alarm System, auto diallers, Passive Infrared (PIR) sensors,

Light sensors, portable Fire Extinguishers, modular fire extinguishers etc. Furthermore, Branches dealing with locker facility are strengthened with additional CCTV cameras and hard disc with a provision to store CCTV recording as per industry standards. The Bank has a system of guarding all the branches as per their Physical Security Risk profile categorized into High Risk,

Medium Risk and Low Risk branches and there is a provision to post security guards in High-Risk branches.

For the safety of vital installations like Server Rooms, DR Sites, two-layer physical security arrangements, Early Fire Detection and Alarm System, Fixed Firefighting System, Clean Gas based Fire Suppression System in server rooms and various types of Fire-Extinguishers are provided.

Adequate number of Customized Cash Vans are hired in each Zone which are equipped with Global Positioning System

(GPS) tracking system, fire extinguisher and CCTV system.

The movement of Cash vans is controlled at Currency Chest level.

The Bank has a well-defined robust Business Continuity & Contingency Plan (Non-IT) to effectively manage potential disasters. Emergency Response Teams are stationed at offices, including branch levels, to provide immediate assistance during incidents such as fires, earthquakes, or terrorist attacks. To enhance staff preparedness, training centres incorporate Security and Fire Safety videos, while

Demonstration Centres have been set up at major locations for hands-on awareness. Additionally, firefighting and evacuation drills are conducted annually at all administrative offices and during visits to branches or other facilities, led by the Banks

Fire and Security Officers. This structured approach ensures proactive safety measures and swift response in emergencies.

A team of dedicated Security Officers and Fire Officers are posted at Zonal Offices & Circle Offices with prime responsibility to carry out audit of physical security measures at branches, installation and maintenance of Security gadgets and to liaison with Police/State authorities in respect to Physical Security and Fire Safety. They act as advisor to respective Zonal Head/ Circle Head in all matters related to Physical Security, Fire Safety & movement of cash.

IX. Internal Control System

1. Internal Audit

During FY 2024-25, Risk Based Internal Audit (RBIA) was commenced/conducted in 8555 branches/offices. During FY 2024-25, 1526 branches/offices were covered under

Concurrent/Continuous audit, covering 83.52 per cent of the advances and 37.12 per cent deposits of the Bank as at 31st

March, 2024.

Information Security (IS) Audit was conducted in 207 offices/ units. FEMA Audit was conducted in 263 eligible branches/ offices i.e. Authorized Dealer (AD) branches & Trade Finance

Centres. All branches were subject to revenue audit.

2. Offsite Monitoring

For strengthening Offsite Monitoring of branches/offices, bank has formed Data Analytics team i.e., Offsite Surveillance

Unit (OSU). OSU is a dedicated Data Analytics Team which is conducting data dump analysis on regular basis and suggesting enhancement in system & procedure for mitigating the identified operational risk.

During the FY 2024-25, the team has undertaken 234 studies and recommended system level enhancement in 81 cases and data correction in 42 studies and both system level and data correction in 64 studies. System level enhancement in 77 cases has been implemented. a. Offsite Surveillance System (OSS) have been automated through an application named e-THIC to bring out fairness, objectivity, transparency, innovation in the internal transaction monitoring system covering transaction in CBS which are high risk, fraudulent and critical in nature. Presently, there are 73 OSS Scenarios which are operational. Alerts are generated on daily basis, weekly basis and monthly basis as the case may be. Alerts have been further categorised into three risk categories i.e. low, medium and high risk. There are 2 low risk, 50 medium risk and 21 high risk scenarios. The alerts generated under these scenarios are attended on maker and checker concept and are closed by delegated authorities as defined for different risk categories. The alerts generated cover staff account transactions, customer account/customer ID transactions, Internal/

Office account transactions and bank/business guidelines. The TAT for closure of alerts are 3 days for high risk, 4 days for medium risk and 6 days for low risk alerts. b. Offsite Surveillance Unit (OSU) module has been made live in CISAP (Centralised Information Systems Audit Portal) portal resulting in better MIS and improved communication amongst various divisions. Classification of studies is being done based on criticality, viz. High, Medium and Low.

3. Risk Based Internal Audit of Administrative Office

The Bank has prescribed Risk Based Internal Audit system for conducting audit of its Administrative Offices.

The audit captures risk perceptions inherent in various areas of functioning of administrative offices including decision making process, communication systems, efficient resource utilization and ways & means used to achieve the goals, etc.

All HO Divisions (Except Vigilance Division), Zonal Offices, Circle Offices, Domestic & Overseas subsidiaries to be audited on annual basis. All other administrative offices will be audited on annual basis except Low risk rated offices, which will be subject to audit once in two years. The Inspection and Audit Division will be subject to audit once in three years by external Auditor.

During FY 2024-25, audit of 227 administrative offices comprising 138 Circle Offices, 22 Zonal Offices, 22 ZRMCs, 9 Regional Rural Banks, 30 Head Office Divisions, 3 domestic subsidiaries, 2 overseas subsidiaries and 1 Office of the

Internal ombudsman was conducted.

4. Credit Audit and Review

During FY 2024-25, Credit Audit has been undertaken for a total of 7,683 loan accounts both domestic and overseas. In terms of Credit Audit & Review Policy, during FY 2024-25, the coverage of Credit Audit is 65.52 per cent of the Banks total credit portfolio as on 31st March, 2024 against RBI and our Banks policy requirement of at least 30 to 40 per cent in a year. The Bank is conducting credit audit through online Credit

Audit module, which is a transparent, effective, accurate and time saving tool for better monitoring of Credit Audit.

5. Know Your Customer (KYC)/Anti Money Laundering (AML)

To ensure meticulous compliance of guidelines in KYC by all

while dealing with new as well as existing customers, the Bank has put in place a Board approved and transparent Know Your Customer (KYC) Policy in line with regulatory guidelines issued by RBI on various KYC related parameters such as KYC Updation, Identification of Beneficial

Owners, UCIC, CKYC etc. are implemented in form and content. For strict compliance of extant KYC guidelines, CASA

Back offices have been established for centralized opening of

Savings & Current accounts. Further, Document Management System (DMS) has been procured for digitalization of customer documents. An AML System has been implemented in Bank for monitoring of customers transactions from money laundering perspective through AML alerts and for scanning against various sanctions lists.

To bring greater awareness amongst Bank staff about KYC and

AML/CFT compliances such as Online basic course on KYC in ‘PNB UNIV has been made mandatory for staff members at branches and one session is mandatorily taken on KYC AML in every training program at training centres.

a. Central KYC Registry (CKYCR)

For the purpose of establishing an account-based relationship, updation/periodic updation or for verification of identity of a customer, the Bank shall seek the KYC Identifier from the customer or retrieve the KYC Identifier, if available, from the

CKYCR and proceed to obtain KYC records online by using such KYC Identifier and shall not require a customer to submit the same KYC records or information or any other additional identification documents or details. In this regard, facility of account opening using CKYCR no. is available at all our Branches through TAB Banking and Document Management System (DMS). To popularize CKYCR, CKYCR no. is displayed on account statement, passbook, internet banking, PNB one etc. channel on clicking link for KYC updation given in IBS and PNB One. This shall provide customers an opportunity to get their KYC updated online without visiting the Bank.

b. Data Governance & DQI:

With reference to recommendation of IBA EASE Steering Committee for Data Quality Improvement in PSBs, bank aimed at developing a uniform Framework to be adopted for a robust Data Quality Program in bank.

As per recommendation, Data Governance Policy has been approved by board on 28.01.2025. Main highlights of this new policy: -

New Roles and Committees constituted for effective Data Governance: - i. Chief Data Management Officer (CDMO) Responsible-for overseeing data quality and customer data privacy in the Bank ii. Head Office Data Governance Committee (HODGC)- The supreme body sponsoring the overall Data Governance Initiative, establishing directives and decisions related to data within the bank. iii. Division/Vertical Data Governance Committee (DDGC)- Data Governance Initiative implementation as per Data Governance Policy and HODGC directive. iv. Zonal Office Data Governance Committee (ZODGC)-

Data Governance Initiative Implementation Monitoring v. Circle Office Data Governance Committee (CODGC)-

Data Governance Initiative Implementation Monitoring vi. Data governance officer (DGO) at different level i.e. HO

Division, ZO, CO and Branches. DGOs will be the Single point of Contact (SPOC) for any Data Governance activity at respective level.

As per IBA sub-committee recommendation, all 25 DQI

Parameters implemented through Dashboard for data quality improvement. Dashboard is available to all HO Divisions, ZOs,

COs and Branches for rectification and monitoring

6. Vigilance

At Punjab National Bank, we prioritize integrity and transparency in all our operations. Our Vigilance Department plays a crucial role in maintaining the highest standards of ethics and compliance.

The Bank is committed towards prevention and detection of fraud, identifying potential risks and taking proactive measures to mitigate them. We ensure compliance and Monitoring by adhering to regulatory guidelines, policies and procedures that are formulated/designed to ensure that bank operates with the highest standard of integrity and transparency at all the times. The main objective of vigilance administration is to promote a culture of integrity, fostering a work environment that encourages ethical behaviour and accountability.

Due to efficiency achieved through preventive vigilance measure, effective monitoring mechanism and supervisory oversight over cases, bank is able to dispose-off 319 cases out of 412 cases registered during FY (2024-2025) i.e. 77.42 per cent.

The Bank has taken various initiatives to improve the efficiency of Vigilance Administration like the vigilance department of the Bank has been publishing Magazine, "PNB Vigil". Online quiz on the Banks products, circulars, operative guidelines, vigilance advisories and general banking awareness is being conducted regularly. Various training sessions/seminars have been organized on Pan-India basis wherein officials from

Vigilance Department participated and interacted on Vigilance matters.

In addition to the above, the Bank is proactively working and using innovative ideas for strengthening vigilance administration and compliance like in FY 2024-25: a. Vigilance department made a short & concise movie on Disciplinary Proceedings for assisting various field functionaries involved in the process of Disciplinary Action, which throws light in the world of vigilance and disciplinary work. The movie aptly portrays that vigilance is everyones responsibility and how the disciplinary proceedings should be handled. b. The Bank has also revamped the process of submission of Assets and Liabilities. Reports are customised for monitoring variation in Assets and Liabilities, it will ensure hassle free data submission and processing. c. Vigilance Awareness Week (VAW) 2024 was observed by Punjab National Bank from 28th October, 2024 to 3rd November, 2024 with the theme "Culture of Integrity for Nations Prosperity". i. Approx. 4.90 Crore impression were made to the public by way of various programmes like workshops/walkathons/ seminars/public gatherings/preventive vigilance functions/Internet Banking logins/ Mobile Banking/SMS/ social media/WhatsApp and CSR Activities etc. ii. Two quizzes on Vigilance Awareness were conducted on the Banks learning portal PNB Univ with a total participation of 26,281 staff members. iii. Wide publicity was given to Vigilance Awareness Week through Hoardings at prominent places across the country.

Activities were conducted through 4701 "Awareness Gram Sabhas" in rural and semi urban areas involving 1,42,471 participants. d. Online quiz competitions were also organized for general public on Banks social media accounts i.e. Twitter, Facebook, LinkedIn and Instagram attracting good response from the public.

Online/Offline trainings were organized as per the directions of Honble Central Vigilance Commission on Capacity Building

Programs and Trainings were imparted to Investigating officers and Presenting officers with a total participation of 988 staff members.

X. Right to Information (RTI) Act

The Bank believes that transparency is the key towards building sustainable trust with the existing and potential customers of the Bank. The bank is committed towards this objective by implementing the provisions of RTI Act in letter and in spirit.

During the period of 1st April, 2024 to 31st March, 2025, the Bank received 6,444 Right To Information (RTI) related applications.

XI. Discussion on Financial performance with respect to operational performance

As on 31st March, 2025, the Banks Gross Global Business stood at Rs. 26,83,260 Crore with Gross Global Advances at Rs. 11,16,637 Crore and Gross Global Deposit at Rs. 15,66,623 Crore. Current and Saving Deposits (CASA) was at Rs. 5,73,543 Crore with domestic CASA share at 37.95 per cent. In addition, the Banks Operating Profit was at Rs. 26,831 Crore with the Net Profit of Rs. 16,630 Crore for the FY 2024-

25.

XII. Performance under EASE

EASE is an initiative by Department of Financial Services (DFS), Ministry of Finance (MOF), Government of India (GOI) as part of the PSB Reforms Agenda and is continuing under its 8th iteration. Over the years, it has become deeply ingrained in all PSBs strategic decisions.

Journey from EASE 1.0 starting with Responsive and

Responsible PSBs, EASE 2.0 moving towards Clean and smart banking, EASE 3.0 stepping up to Smart-tech enabled banking for aspiring India, EASE 4.0 continuing with Tech-enabled simplified and collaborative banking, EASE 5.0 revolutionizing banking with Enhanced digital experience;

Data- driven, integrated and inclusive banking, EASE 6.0 committed towards Customer-friendly banking enabled by modern capabilities. Bank secured overall 3rd rank in EASE 5.0 Annual Performance Index, improved and secured overall 2nd rank in EASE 6.0 Annual Performance Index.

In its present version of EASE 7.0 Banking with National goals focusing on Economic development, customer delight and resilient banking.

The Bank has made notable progress under the EASE 7.0 initiative, focusing on Economic development, customer delight and resilient banking. The initiative is driven by Five themes spread across 21 action points. Bank secured 3rd rank among PSBs during the Quarterly EASE Performance Index of

December quarter, achieving 1st rank in theme-2: "Excellence in customer services" and 2nd rank in Theme-4:"Effective risk/ fraud management, collections and recovery" with overall score improvement of 57.8 per cent from the baseline ratcheting up

Q-o-Q performance.

Key achievements include - Identification of champion sectors; Digitization and efficiency of collection management;

Operational resilience; Introduction of a Digital Queue

Management System; Additional services through - Digital, Non-Base Branch, TAB banking, WhatsApp Banking and UPI; Bot-based Website; Green Cell Formation; CRM Customer

360, Marketing Management, Services and Complaint Management; Comprehensive HR reforms including

Digitization of Staff Vehicle Loan & Overdraft facility.

The foregoing initiatives underscore the banks commitment towards EASE reform agenda. Starting from 2018 onward bank continuously aligned itself with the EASE priorities enhancing customer experience and operational efficiency. These efforts ensure that the bank maintains a robust and competitive presence among public sector banks, reinforcing its position amongst top performing bank under EASE Reform Agenda.

XIII. Material Developments in Human Resources (HR)/Industrial Relations front including number of people employed

1. Human Resources Management a. Total number of employees: Staff strength/Employees given in the following table are for PNB for March 2024 and for March 2025 including those on deputation in the subsidiaries.

Cadre wise Staff Strength

Cadre	Cadre wise Staff Strength March, 2024 (31.03.2024)		March, 2025 (31.03.2025)
	Number	% of Total Staff	Number	% of Total Staff
Officer	51488	50.31%	53137	51.72%
Clerks	28080	27.44%	28013	27.26%
Sub Staff (incl. PTS)	22781	22.26%	21596	21.02%
Total	102349	100.00%	102746	100.00%

b. Reservation Policy: The Bank follows the reservation policy for SCs, STs, OBCs and PWD as prescribed by Government of India from time to time. Besides as per norms, the bank has taken various steps like maintaining reservation roster, separate liasoning officer, etc.

Strength of SC/ST/OBC/PWD Employees (in numbers)

		March 2024				March 2025
Cadre	SC	ST	OBC	PWD	SC	ST	OBC	PWD
Officer	10319	3956	13237	1488	10517	4049	14266	1546
Clerks	5566	1596	7644	893	5572	1568	7782	884
Sub Staff	8725	1578	5741	497	8361	1515	5471	495
Total	24610	7130	26622	2878	24450	7132	27519	2925

c. Age Profile of the Employees: The average age of overall employees has come down over the years. The movement of cadre-wise average age in the last five years is as under:

(Average age in years)

Average Age as on	Officer Clerical		Sub Staff	Over All
March 2023	39.23	38.40	36.86	38.46
March 2024	39.28	38.67	37.45	38.70
March 2025	39.12	38.70	38.17	38.81

d. Industrial relations: Industrial Relations in the bank continued to be cordial with workmen union/Officers association. Various physical meetings at Circle/ Zonal/ HO level were held with representatives of majority Officers Association/Workmen

Unions during the year to promptly resolve the issues raised by union/association.

2. Training Activities

In a dynamic banking environment, continuous learning is key to staying ahead of industry trends, regulatory updates and technological advancements. At PNB, a robust HR framework ensures capability-building through classroom training, e-learning, mentoring and experiential learning. Induction programs onboard new employees, while ongoing training aligns personal growth with strategic goals. In FY 2024-

25, innovative training strategies strengthened leadership, expanded capabilities and prepared staff to navigate the evolving financial landscape, reflecting PNBs commitment to nurturing talent and driving excellence. To promote conducive environment in the Bank for learning and to equip the existing manpower with appropriate skills and knowledge for the Banks growth and development, following innovative measures were taken in the FY 2024-25:

a. Grooming Plans: i. Leadership Development program under PNB Udaan-

A refresher programme under the title "Udaan Elevate" was conducted for executives who attended the program last year and there was a 65% positive variation is seen in the behavioural competencies of the said officers. Further, under Project Udaan, the Leadership Development

Program "Igniting Potential" was extended to Scale IV officers. The three-day program focused on functional competencies on Day 1 and behavioural skills on Days 2 and 3, with an emphasis on impact-oriented working and customer centricity. ii. Training for Agriculture and MSME focused branches:

A focused group of Agriculture Officers and Marketing Officers posted in agriculture-intensive and MSME-intensive branches were provided training on functional and behavioural competencies, aimed at improving customer service and enhancing the overall customer experience. iii. On Location Program for Subordinate Staff With around 21,700 subordinate staff playing a vital role in business growth, it was observed that they often remain outside routine training. To address this, targeted training was conducted focusing key areas to empower and motivate them, ultimately enhancing customer service and contributing to the Banks overall growth. 98 per cent of the staff members felt the training is much needed and essential for their growth and development.

b. Technical Tools - i. L&D Tool -To improve the quality of training nomination process and to digitize the training management process in the Bank using various parameters like eligibility, recommendation through Appraisal process, performance of the employee, etc. a new Learning and Development (L&D) tool has been developed. ii. PNB Prarambh- MT tool launched in Udaan Portal:

The Bank, under the umbrella of project UDAAN, has launched ‘PNB Prarambh - a digital tool for the stakeholders involved in the 52 weeks Induction journey of Management Trainees. ‘PNB Prarambh shall enable the participants, administrators, unit heads as well as the mentors to digitally view and track the progress and provide inputs to the trainees across the 52-week training schedule. iii. Skill Assessment Tool - Skill Assessment Process has been launched under Project UDAAN, aimed at building a highly skilled and talented officer pool for Punjab National

Bank. This assessment aims to assess and evaluate the skillset of officers across scales 1-6, to create a comprehensive database of officers skills, provide personalized reports to facilitate upskilling and grooming.

c. Reward and Recognition: i. Star Award - To boost trainee motivation and engagement, the ‘Identification of STARS initiative was introduced, enabling STCs to make the training program impactful and engaging along with recognizing and nurturing the high performers based on their classroom training performance.

d. Knowledge Enablers i. PNB Knowledge Centre

• Multilingual Podcasts - To enhance product awareness and involvement, a podcast series in regional languages was introduced for subordinate staff. This initiative empowers them with better understanding of the Banks offerings, encouraging active participation in business development. The series is available in Assamese, Bengali, Punjabi, Marathi, Tamil, Kannada, Hindi and Gujarati.

• Udaan Leadership Gallery – The Udaan Leadership

Gallery on the PNB Knowledge Centre homepage offers downloadable resources like leadership videos, books, summaries and an overview of Udaan for easy access and reference. ii. PNB UNIV- The Bank has been extensively leveraging the e-Learning platform PNB UNIV to promote the culture of self-learning. Courses on various functional competencies are made available on PNBUNIV. The course allocation on PNB Univ is in line with the assigned job-families of respective officers. 368 courses have been uploaded in knowledge centre as on 31.03.2025.

In addition to this, following Tailor-made training programs to suit employees life cycle have been conducted:

• Programs ranging from induction to cadre change, role change and upskilling were conducted for employees of the Bank across all cadres and scales.

• Customized programs for First Time Circle Heads and First Time Branch Heads were conducted to facilitate their seamless switch to new roles.

• ‘Second Innings programs were conducted for superannuating employees to help them transition to post-retirement life.

• On demand programs such as Training on SARFAESI provisions, Risk Rating, DMS, Vigilance etc. was conducted.

• Training initiatives focused on Diversity, Equity and Inclusion included programs on Leadership and POSH guidelines for women officers. Additional sessions covered essential topics like time management, work-life balance, mental health, stress management and motivation to support holistic development.

• External Trainings - With rapid changes in IT, IBC, cybersecurity, AI, automation and evolving customer expectations, skill requirements in banking are constantly evolving. To address this, 2,159 employees were nominated till 31.03.2025 for specialized training at premier institutes like NIBM, IDRBT, CAB (RBI), IIBF, etc.

• Capacity Building beyond classroom - The Bank, while recognizing the need for continuous up-gradation of knowledge of its employees, offers incentive to staff members on their acquiring specific higher/professional qualifications in terms of the approved scheme. The number of approved courses under the Scheme for providing incentive to Staff Members for acquiring Specialized Qualifications/qualifying Specific Courses, was increased.

WAY FORWARD

In the near-term, global growth outlook remains downcast, as uncertainty surrounding tariffs and the individual policy responses of different countries could result in lower investment spending, subdued consumer confidence and a slowdown in global trade.

Indias strength to withstand these headwinds stem from its robust growth fostered by a strong macroeconomic framework and moderating inflation, with strong domestic engines of growth.

The Indian economy is projected to maintain its robust growth trajectory in FY 2025-26, with estimates generally ranging between 6.2 per cent and 6.5 per cent. India is expected to be the fastest-growing major economy globally in both 2025 and

2026, significantly outpacing global growth projections, which are around 2.8 per cent to 3.0 per cent.

The agricultural sector in India is poised to sustain its momentum, supported by bumper kharif and rabi harvest and higher summer sowing amidst comfortable reservoir position. Risks emanating from the rise in temperature above normal levels and likelihood of heatwaves in the current summer season (April - June), however, need to be monitored.

Industrial and services activity continue to remain resilient. The focus on infrastructure development, encouraging private investment and managing inflationary pressures will be crucial in realizing the full growth potential.

Going forward, India is poised to benefit from supply chain realignments, diversified Foreign Direct Investment (FDI) and engagement with global investors seeking resilience and scale, given its already established trade linkages. Moreover, Indias consistent strength in services exports and remittance inflows continues to provide a vital buffer for the current account. Calibrated policy support can help India turn global volatility into an opportunity and strengthen its position in the emerging world economic landscape.

The Indian banking sector is poised for continued growth in

FY 2025-26, although the pace might see a slight moderation compared to the high growth witnessed in the recent past. Most reports anticipate a healthy credit growth for the Indian banking sector in FY 2025-26 with estimates ranging from 10.8 per cent to 13 per cent. Factors driving this credit growth will include economic recovery, government infrastructure spending and a potential revival in consumer demand. Easing of regulatory norms related to risk weights on unsecured lending and NBFCs is also expected to support credit expansion. Deposit mobilization remains a key area of focus and Deposit growth is projected to be around 9-11 per cent. However, banks might continue to face competition from other investment avenues, impacting the growth of low-cost CASA (Current Account and Savings Account) deposits. The gap between credit and deposit growth is expected to narrow in FY 2025-26.

While asset quality has improved significantly, there is a potential for a slight rise in Non-Performing Assets (NPAs) in the retail sector, particularly in unsecured loans. Banks are expected to consolidate their retail lending portfolios to manage this risk. However, strong provisioning coverage ratios (PCR) should provide a buffer against potential defaults.

Banks are likely to witness pressure on their Net Interest Margins going forward as RBI continues with its rate easing cycle. The advances of banks will be immediately repriced at lower rate as they are linked to External Benchmark. Deposits will be repriced with a lag. Thus, banks will need to evolve corresponding fresh strategies to cut costs to maintain profitability while at the same time achieving consistent deposit and advanced growth.

Adoption of new technologies based on Artificial Intelligence and Machine Learning for promoting new products and services, as well as in the domain of credit monitoring and fraud prevention, is another area requiring attention of banks in 2025. Collaboration with fintechs is also expected to emerge as a long-term strategy for sustainable growth.

The regulatory environment is expected to remain supportive of growth, with potential easing of certain norms.

The Indian banking sectors resilience in FY 2025-26 will depend on its ability to navigate economic challenges, manage liquidity pressures and embrace technological innovations.

Punjab National Bank (PNB), a cornerstone of Indias financial infrastructure since 1895, remains steadfast in its commitment to propelling the nations economic growth and realizing the vision of a Viksit Bharat. The bank actively contributes by extending credit across diverse sectors, fostering financial inclusion through schemes like the Pradhan Mantri Jan Dhan Yojana (PMJDY) and supporting Micro, Small and Medium Enterprises (MSMEs) with tailored financing options such as the Mudra Yojana. By strategically aligning its lending and financial products with national priorities, PNB aims to empower citizens, enhance agricultural income and stimulate entrepreneurship, thereby playing a crucial role in Indias journey towards becoming a developed nation by 2047.

Recognizing that customer satisfaction is paramount, the bank is focusing on enhancing its services, personalizing offerings and leveraging technology to create seamless and convenient banking experiences. Recognizing its role as a trustee of public funds, PNB prioritizes transparency, disclosures and robust internal checks and balances to prevent misuse of assets and maintain public trust. It has taken significant steps to strengthen its internal controls and risk management practices. Moving forward, PNB is committed to embedding ethical practices at all levels of its operations to ensure sustainable growth and safeguard the interests of all stakeholders.

In its pursuit of maximizing returns for its stakeholders, PNB focuses on enhancing operational efficiency, improving asset quality and strategically growing its business. The bank actively leverages technology to introduce customer-centric digital products and services, expand its reach and streamline processes. By focusing on prudent financial management, reducing non-performing assets and capitalizing on growth opportunities within the Indian economy, PNB aims to deliver consistent and sustainable value to its stakeholders. The banks commitment to ethical operations and strong governance further reinforces its ability to generate long-term shareholder value by fostering a stable and trustworthy financial institution.