MC Interview: Closely watching Adani group developments, says PNB MD & CEO Atul Kumar Goel

While PNB's original exposure (to Adani group) was about Rs 6,500-7,000 crore, but the present outstanding is about Rs 3,500 crore

State-run Punjab National Bank (PNB) is keeping a close watch on developments pertaining to the Adani group, said Managing Director and CEO Atul Kumar Goel in an exclusive conversation with Moneycontrol on February 24.

"We are keeping a close watch on the developments and will see how things pan out," said Goel. He added that PNB’s exposure to the group is within the policy framework of the bank and the guidelines set by the regulators.

That apart, Goel spoke on industry issues and PNB’s business plans. Below are the edited excerpts:

What is your exposure to the Adani group?

As we have already said earlier, our original exposure (to Adani group) was about Rs 6,500-7,000 crore, but the present outstanding is about Rs 3,500 crore

Will you lend to Adani in future?

We will see what the position of the group is when the time comes and decide accordingly.

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Will this issue alter the credit appraisal process of banks when it comes to large, complex corporations?

I don't think there is a need to change the process. Whatever exposure we have, it is as per the bank’s policy framework and regulatory guidelines.

Where do you see most of the loan demand stemming from?

There is a lot of demand on the infra side, particularly for road projects, and there is very good demand from NBFCs (non-banking financial company). Because when we are not in a position to finance certain projects, then NBFCs finance. There’s also demand from the steel and cement industries for expansion, etc.

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India Ratings rated your AT1 bonds AA+. You were to raise Rs 800 crore against these bonds. When would that be?

The board has already approved raising Rs 12,000 crore in the current financial year. Of this, Rs 5,500 crore is for Tier 1 bonds, and Rs 6,500 crore for Tier 2.

Against Rs 6,500 crore, we have already raised Rs 4,000 crore, that too in the last quarter. By way of AT1 bonds, we have already raised over Rs 3,200 crore.

If the interest rates are reasonable, only then will we raise funds. Otherwise, there is no immediate need.

In Q3, net profit fell 44 percent to Rs 629 crore. What’s the outlook for Q4?

If you see all the four quarters of the last calendar year, you will see that both our operating profit as well as net profit has increased quarter-on-quarter (QoQ).

On the other hand, the gross and net NPAs (non-performing asset) have dropped QoQ. The PCR (provision coverage ratio), which used to be around 81 percent, has increased to 85 percent. Since our PCR has already improved to 85 percent, it has reduced our aging requirement.

Has PNB put the Nirav Modi episode behind? Any recoveries so far?

We have recovered a little bit, about Rs 70-80 crore. The process is going on. We have taken all possible steps to ensure maximum recovery.