MC Interview | PNB to review RBI draft norms on business, prudential regulation for investments: CEO Atul Goel

Atul Kumar Goel- PNB

Punjab National Bank will review and evaluate the implications of the central bank's draft circular on business and prudential regulation for investments, Atul Kumar Goel, managing director and chief executive officer, told Moneycontrol in an exclusive interview.

The assessment is needed because the bank’s subsidiary, PNB Housing Finance, falls under this norms, he said. “We are also doing the housing business. We will discuss in the board.”

The draft proposal from the Reserve Bank of India released on October 4 said that only a single entity within a bank group can undertake a particular form of permissible business. It further said that multiple entities within a bank group shall not undertake the same business or hold or acquire the same category of licence from any financial sector regulator.

Excerpts from the interview:

Why treasury income has gone up sharply?

One is the income from G-Secs (government securities), which is purely dependent on the movement of the yield and second one is non-SLR. We are very active in the equity market too. It is a combination of all, not only the fall in yields.

The bank has gained some profit from the sale of investment. What kind of investment was this?

Earlier, we were not recognising the appreciation. Now, as per the new guidelines, there are three categories, HTM, AFS, and FVPT. Whatever the profit is available, even if you have not sold, that will also be taken in the P&L. For the AFS and the G-Sec, it will go to the AFS reserve in the balance sheet. This reflection is the categorisation.

Is there further scope for cost of deposits to go up?

I think we have reached the peak. What will be more expensive than this?

We are not in the market for raising bulk deposits, we are giving the consultation for the saving bank and the current account, how to improve because that is the product of the customer service. Last year, we opened more than one crore accounts and in the first half this year, we have opened more than 60 lakh accounts. Similarly, we opened 2.68 lakh current accounts last year and 1.21 lakh in the first half this year.

We are thinking how to improve the customer service, how to provide the digital channel.

I do not see any further scope of going up the deposits, but as the rate cut or the interest rate moves in the market, it has a downside potential.

If that rate cut happens, then can we expect some lending rate cut by PNB?

The lending rate is already linked with the repo rate, it will be repriced very next day.

How much impact was there due to penal charges?

There has not been much of an impact, maybe 1 or 2 basis points, because we were not charging much panel interest.

What is your take on the RBI’s draft circular on business and prudential regulations for investment? 

That is under discussion because PNB Housing Finance is coming under that category. We are also doing the housing business. We will discuss in the board.

Which technically written-off accounts were these where you have recovered Rs 1,976 crore?

This was the NCLT accounts. Around Rs 1,000 crore we have recovered from the NCLT accounts. They were technically written off accounts.

Has any large corporate approached you for loan?

There is demand in three sectors - road, NBFC, and solar. In the telecom, if any good company comes, we will give loans. But only if there is AAA rating, otherwise, we will not.

You have some exposure of MTNL, where does this stand in your account?

Recovery will definitely come. It is a matter of time. Whenever there will be a discussion, recovery will come. We have an exposure of Rs 435 crore, because of this our slippages have gone up, otherwise it would be lower.