Punjab National Bank (PNB) was severely hit by Nirav Modi and Mehul Choksi’s fraud of Rs. 14,357 crore. They became the laughing stork in the whole Nation. Post scam, within 5 months, they recovered Rs. 11,378 crore from lenders. According to their data, this is more than what they collected from past 2 years. How? Let’s see.
PNB is desperate to return to profitability and avoid featuring on the Reserve Bank of India’s watchlist. They had a record losses last fiscal, mainly due to the Rs. 14,357-crore fraud involving jewellers Nirav Modi and Mehul Choksi. Since then, PNB has stepped up efforts to get back money from defaulters. It had made a recovery of Rs. 5,618 crore in the entire 2017-18 and Rs 5,643 crore in the previous year. In this fiscal, it is even more – an astonishing Rs. 11, 378 crores.
How they did it?
The bank set up a dedicated stressed asset vertical this fiscal and deployed as many as 3,000 employees. They are aimed to pursue recovery from various defaulters. The efforts were duly bolstered by the emergence of the Insolvency and the Bankruptcy Code (IBC).
Now comes the recovery part. PNB was one of the biggest beneficiaries of the acquisition of debt-laden Bhushan Steel by the Tatas through the insolvency process. It received Rs 3,081 crore. It recovered almost Rs. 335 crore from Electrosteel and Rs 110 crore from Monnet Ispat through the IBC.
It also got back money from a number of other accounts using other modes such one-time settlements with borrowers. These defaulters include Shree Sidhbali Ispat (almost Rs107 crore), GTL (Rs 84 crore) and Indo Rama Synthetics (Rs 52 crore).
It next eyes the resolution of Bhushan Power and Steel. The National Company Law Appellate Tribunal will hear the Bhushan Power case on September 24 on the eligibility of various bids.
On bad loans, the finance ministry has already ran riot on public sector lenders to improve recoveries. They were also asked to implement
a set of other reform measures, and boost business
Banks responded on the scolding. The overall recovery of all the 21 public sector banks (PSBs) stood at Rs 36,551 crore, almost a half of the total they had recovered in the entire 2017-18. PNB, however, seems to have left almost all its PSB peers behind. In fact, its recovery of Rs. 8,445 crore in the June quarter was 23% of the total recovery made by all PSBs.
The record high recovery comes at a time when the bank is striving to leave the ghost of the scandal behind even though the fraud has exacerbated its non-performing asset (NPA) ratios and caused net losses. Its net NPAs stood at 10.58% as of June, against Bank of Baroda’s (BoB’s) 5.4% and Canara Bank’s 6.91%.