Jul 27, 2013, 02.15 PM | Source: CNBC-TV18

Hope to maintain margin at 3.5% going ahead: PNB

According to Rakesh Sethi, the term deposit of the bank is also growing at good 27 percent, whereas the credit growth is muted to an extent and therefore, it does not require more liquidity at the moment

I don’t see any pressure at all as of now and have buffer of almost 6 percent on my statutory liquidity ratio (SLR), which is about 29 percent

Rakesh Sethi


Punjab National Bank

Punjab National Bank expects to maintain margin at around 3.5 percent fgoing ahead, says ED Rakesh Sethi. The bank is hopeful of ending the year with 10-12 percent growth, he told CNBC-TV18 in an interview.

Public sector lender posted a rise of 2.3 percent year-on-year in its first quarter (April-June).

He further added that its savings have been growing at a very healthy rate and term deposits have risen by 27 percent. Its credit growth is muted so it does not require more liquidity at the moment. “This kind of growth is enough to sustain our credit growth. So, I don’t see any pressure at all as of now,” he added.

Below is the verbatim transcript of Rakesh Sethi's interview on CNBC-TV18

Q: How were the non-performing loans (NPL) looking in the current quarter? Can we have sudden big accounts like Winsome?

A: If you take the total slippage which is about Rs 3,594 crore, Rs 1,656 crore is out of one large gem and jewellery account. This was a 27-year-account that just slipped and the rest was Rs 1,938 crore. If you take the reduction, that comes to about Rs 1,969 crore. But for this one-off account we recovered about Rs 55 crore during this quarter, but still since there were signs of weakness.  It would be prudent that till the (CDR), in case it goes through to classify it as an NPL and keep the option open for recovery rather than letting it hang.

Q: Is the account in CDR only for now or are you still not sure whether it would go further?

A: On Thursday, the promoter had come in and presented himself before the CDR. The CDR has put out certain conditions, which if we fulfil, then it will be consider for admittance.

Q: Do you think it will pull through or will it ultimately have to be written off?

A: There would be a recovery. After all, the man has been in business for almost a generation.

Q: At the moment, have you provided 15 percent for it as first year NPL?

A: No, a little more, almost 40 percent more than the regulatory requirements. So, we provided about 25 percent. As soon as our results were announced, you said we had under provided because the provisioning coverage ratio (PCR) had come down. The PCR would naturally come down for a large advance unless you provide 58 percent on this particular account. So, when you provide 25 percent, automatically it comes down.

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