Will PNB chief Sunil Mehta’s favourite book help him weather the storm?

No .6 | Bank: Punjab National Bank: Annual rate of interest: 6 percent | What Rs 1 lakh grows to in three year: Rs 1,19,562

Sunil Mehta, the Chief Executive Officer of Punjab National  Bank may be a man caught in the midst of a financial storm. But on any normal day, he would much rather prefer spending time with his favourite book -- biography of Swami Paramahansa Yogananda -- than deal with diamonds and diamantaires.

In January this year, the Chief of India's second largest government lender, got struck by disaster. A mega fraud worth over Rs 11,400 crore led by billionaire diamond and jewellery businessman Nirav Modi had just been unearthed at the bank.

A seasoned banker, Mehta, took charge as the Chief Executive Officer and Managing Director of PNB in May 2017, at a time when banks were reeling under intense pressure from non-performing assets (NPAs).

With no end in sight to the NPA woes, and just few months short of celebrating his first anniversary at the Delhi-based bank, Mehta is now faced with another crisis -- the wrath of the government, investigative agencies, and the media, something he would have never dreamed of having to go through this close to the end of his over 35-year career in banking.

On the morning of February 14, when the world was busy celebrating Valentines day, PNB informed the stock exchanges, as they opened for trading, that it had detected a fraud worth USD 1.7 billion (around Rs 11,400 crore). By the end of the day PNB had eroded nearly Rs 4,000 crore of market cap. Over the next five days another Rs 12,700 crore of investors wealth got wiped out.

A day after the scam was unearthed, Mehta called it a “cancer that was going on since 2011. We have brought it out and we are resolving it," he said patiently addressing a packed news conference in Delhi.

A soft spoken Mehta said if the investigation process says “it is our liability, then we will accept it."

Putting up a brave front two days later while addressing analysts through a teleconference, Mehta acknowledged the bank’s NPAs will rise because of these loans. However, he tried to assuage investors by pointing out that his core Tier I ratio was still at 8.2 percent, higher than the minimum 7 percent required, which means the bank is adequately capitalised.

Mehta still has a tough task of cleaning the books. PNB has gross bad loans or NPAs worth Rs 57,519 crore, of which 25 percent are on account of borrowers who are wilful defaulters. PNB’s net NPAs were at Rs 34,076 crore as on December end 2017.

Since taking over at the helm, Mehta has also tried to consolidate by identifying 200 to 300 loss-making branches, initiating the process of either merging or closing them down.

Following the scam, PNB has also transferred around 1,415 employees including 721 officers, 437 clerks and 257 sub-staff.

From field to corner room

Born in Sambhar, Rajasthan, Mehta has spent a large part of 35-year career in Allahabad Bank starting in 1982. He joined Corporation bank two years ago in January 2016 as the Executive Director after serving at the position of a General Manager at Allahabad Bank.

He is a Post Graduate in Agriculture, MBA in Finance and a Certified Associate of Indian Institute of Bankers (CAIIB) with over 35 years of rich experience in various administrative and functional capacities at Branches, Zonal Offices, and also at the Head Office level. He started his banking career as an Agriculture Field Officer at Allahabad Bank in 1982.

A bike lover, Mehta would indeed know the risks of life and one of the critical lessons learnt from one of his teachers, “what you are doing is not important, but how it is perceived” will definitely hold true during these testing times.

For now, Mehta would be needing more lessons from his favourite book ‘The Autobiography of a Yogi’ by Swamy Paramahansa Yogananda, which might come handy as he is set to deal with tougher times in the next few months.