Fraud-hit Punjab National Bank hopes to recover Rs 20,000 crore from NPAs in the first-half of FY19

Fraud-hit Punjab National Bank (PNB) has reportedly set a target to recover some Rs 20,000 crore from its non-performing assets (NPAs) in the first-half of fiscal 2019, according to a media report. The bank, which suffered the biggest-ever quarterly loss for an Indian bank, at Rs 13,417 crore in the fourth-quarter, has recovered around Rs 5,600 crore in the first two months of the ongoing fiscal, according to The Economic Times.  “We have set a target of recoveries to the tune of around Rs 8,000 core in the first-quarter; already we have achieved the total amount of recovery done last year,” a bank official was quoted as saying by the newspaper. On Wednesday, PNB received 46.70 crore equity shares from debtor Electrosteel Steels, which will be bought by Vedanta Star Ltd. Electrosteel allotted nearly 740 crore equity shares to 26 lenders. [caption id=“attachment_4391909” align=“alignleft” width=“380”] Representational image. Reuters[/caption] On Monday, Fitch Ratings downgraded PNB’s viability rating (VR) by two notches. The downgrade is a reflection of a significant deterioration in PNB’s standalone credit profile, Fitch said in its report. The deterioration in the bank’s core capitalisation was caused by a sharp increase in its non-performing loans (NPLs), including the $2.2 billion in fraudulent transactions reported in February 2018, and the related increase in credit costs, which resulted in large losses in the financial year ended March 2018, Fitch added. “The bank is planning to sell [a] stake in the housing finance company [PNB Housing Finance]. Besides, it hopes to recover some of its bad loans through the IBC resolution process,” an official told the PTI earlier this month. PNB is looking to raise Rs 13,000 crore via a stake sale in subsidiaries and a recovery of bad loans. The PSU lender holds a 39.08 percent stake in PNB Housing Finance. PNB’s gross net-performing assets (NPAs) rose to 18.38 percent of gross advances as on 31 March, 2018, as against 12.53 percent a year ago. Net NPAs also soared to 11.24 per cent, compared with 7.81 percent. The bank’s decision to strengthen internal audit controls, by separating the ‘pre-sanction appraisal and post sanction monitoring’ teams for credit disbursal has also fast-tracked the recovery process. In April, PNB divided the process of underwriting of credit into four components with different employees focused on – sourcing appraisal, processing and underwriting, documentation and disbursement recovery. The country’s second-largest state-run bank has suffered a loss of over Rs 14,000 crore on account of a fraud allegedly perpetrated by billionaire jeweller Nirav Modi, his uncle Mehul Choksi and their firms, and has provisioned for half of that amount in the January-March quarter. With inputs from agencies