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Punjab National Bank.

BSE: 532461 Sector: Financials
NSE: PNB ISIN Code: INE160A01022
BSE 00:00 | 24 Apr 2020 Punjab National Bank
NSE 05:30 | 01 Jan 1970 Punjab National Bank

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OPEN 31.00
PREVIOUS CLOSE 31.15
VOLUME 527805
52-Week high 91.15
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P/E
Mkt Cap.(Rs cr) 28,457
Buy Price 30.25
Buy Qty 1507.00
Sell Price 30.25
Sell Qty 73.00
OPEN 31.00
CLOSE 31.15
VOLUME 527805
52-Week high 91.15
52-Week low 28.75
P/E
Mkt Cap.(Rs cr) 28,457
Buy Price 30.25
Buy Qty 1507.00
Sell Price 30.25
Sell Qty 73.00

Punjab National Bank. (PNB) - Director Report


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Company director report

2018-19

The Financial Year 2019 was a year of reckoning for Punjab National Bank. Despitenumerous challenges your Bank displayed resilience and overcame the adverse impact in themost resolute manner. A series of measures and strategic initiatives were undertaken inthe Bank ranging from strengthening of systems procedures and control measures torealignment of business strategy. Efforts were also channelized towards improvingrecovery capital conservation and incorporating structural changes in the Bank.

Due to the swift action and strategy your Bank could make a good progress and delivercommendable operating performance. The highlight of the performance was addressing of thekey challenges namely improvement in asset quality improving the operating profit andcapital optimization without any adverse impact on its business. There has been animprovement in the crucial performance parameters in FY'19. There has been decline inGross Non Performing Assets and Net Non Performing Assets helped by record Gross Recoveryof more than Rs.20000 crore in FY'19 as against the Recovery of Rs.9666 crore duringFY'18 and YOY increase of 26.2% in Bank's Operating Profit to Rs.12995 crore.

The Bank's Gross Domestic Business increased by over Rs 1 lakh crore during thefinancial year to reach the landmark figure of Rs 11.45 lakh crore as at March'19 showinga YOY growth of 11.1%. While Gross Domestic Advances recorded YOY growth of 14.1% to reachRs. 4.91 lakh crore Domestic Deposits at Rs. 6.54 lakh crore grew YOY by 9.0%. The Bank'sCASA Deposits stood at Rs. 2.85 lakh crore and the share of CASA to Domestic Deposits wasat 43.51%.

To summarize Financial Year 2018-19 was indeed an eventful year for the Bank whereinwe successfully left the adversity behind reflecting a clear triumph of self belief andtrust of our customers and stakeholders. Bank's performance has been recognized at diverseprestigious platforms and your Bank was adjudged as the ‘Best Performing Bank'amongst all Public Sector Banks and conferred with "EASE Reforms Excellency' Award.Besides in terms of customer satisfaction ratings your Bank has been ranked 2nd amongall Public Sector Banks in India in the recent Forbes magazine survey for assessing"The World's Best Banks 2019".

Against this backdrop your Directors have pleasure in presenting the Annual Report ofyour Bank for the year ended March 31 2019 (FY'19) along with its audited AnnualFinancial Statements.

OUR PERFORMANCE

A. FINANCIAL PERFORMANCE

Assets and Liabilities

Total Assets of the Bank increased YOY by 1.19% to Rs 7.75 lakh crore as at 31st March2019 from Rs 7.65 lakh crore as at 31st March 2018. During the period the Net Advances ofthe Bank increased by 5.65% to Rs 4.58 lakh crore from Rs 4.34 lakh crore. Investmentincreased by 0.91% to Rs. 2.01 lakh crore from Rs 2.00 lakh crore as at 31st March 2018.

On the Liabilities side Global Deposits rose by 5.26 % from Rs.6.42 lakh croreto Rs 6.76 lakh crore during this period. Borrowings declined YOY by 35.3% to Rs 39326crore from Rs 60851 crore in March 2018.

Net Interest Income

Net Interest Income of your Bank increased YOY by 15% to Rs 17156 crore during FY'19.While Interest Income grew 6.9% YOY to Rs.51310 crore Interest Expenses growth wascontained at 3.3% to Rs.34154 crore.

Operating Profit

Operating Profit of your Bank grew by a robust 26.2% YOY during the FY to Rs 12995crore. Core Operating Profit excluding gains from treasury operations grew YOY by 69.1% toRs 11903 crore. Total Income of your Bank increased from Rs.56877 crore in FY'18 to Rs58688 crore during FY'19. Total Expenses declined from Rs.46582 crore in FY'18 to Rs.45692 crore in FY'19.

Net Profit/Loss

Bank has narrowed down its net loss to Rs 9975 crore in FY'19 against the loss ofRs.12283 crore during FY'18. Total provision stood at Rs 22971 crore in FY'19 including aprovision of Rs. 7167 crore towards the one off incident.

Provisions and Contingencies

During FY'19 your Bank has booked provision (other than tax) of Rs 28341 crorecompared to Rs. 29869 crore last year. Provision for NPA stood at Rs 24435 crore inFY'19. Provision Coverage Ratio of the Bank improved to a robust 74.50% as at Mar'19 from58.42% in Mar'18.

B. OPERATIONAL HIGHLIGHTS

Despite challenging circumstances the Bank performed creditably and reached severalnew milestones. Some of the operational highlights of FY ‘19 are listed below:

Financial

• Bank achieved a new landmark with Gross Domestic Business at Rs 11.45 lakh crorein 31.03.2019.

• The Bank has the highest Net Global Business amongst Nationalized Banks as at31st March 2019.

• CASA Deposits at Rs 2.85 lakh crore remained the highest amongst nationalizedbanks with 43.51% share in Domestic Deposits.

• Retail Advances grew by 21.7% during the year with 25.4% growth in Housing LoanSegment.

• All major National Goals under Priority Sector were achieved as at 31.03.2019.

• Cost of Domestic Deposits declined from 5.25% in March 2018 to 5.24% in March2019.

• Domestic Net Interest Margin increased from 2.42% in FY'18 to 2.59% in FY'19.

Capital

• In order to ensure business growth under capital constraints churning of theportfolio was undertaken towards better rated borrowers with low risk profile. Thestrategic approach ensured a strengthened balance sheet with capital conservation.

• To instill a sense of belongingness towards the Bank the Employee SharePurchase Scheme (ESPS) was implemented which garnered an impressive more than 90%subscription. The capital infusion by the Government under the Recapitalization planfurther strengthened the CRAR. The Bank's CRAR stood at 9.73% as on Mar'19 constitutingTier I capital of 7.49% and Tier II capital of 2.24%.

IT and Digital Initiatives

• Your bank believes in leveraging technology for delivering best customerexperience. Bank continues to invest in automation of our internal processes to improveefficiency risk management and reduce cost of operations. Bank has introduced differentdigital applications in order to facilitate digital transactions such as PNB M-PassbookBHIM PNB PNB MobiEase etc.

• Recently Bank has launched "PNB ONE" by unifying all MobileApps under one App for providing various banking processes through a single platform. Bankendeavours to enable all the eligible financial transactions and Value Added Servicesthrough this App.

• As a result of Bank's efforts towards digitalization digital transactions haverecorded more than 100% YoY growth in FY'19. Bank has achieved about 120% of the annualtarget set up by Ministry of Electronics and Information Technology(MeitY) in February2019 itself.

Transformation Exercise

• Under the comprehensive in-house transformation exercise Mission PARIVARTANBank aims to transform itself into a future ready Bank of the country. In this directionvarious initiatives were taken to implement structural changes in the Bank through thethree Ps i.e. People Processes and Products (PPP).

• Centralized Loan Processing Centres (CLPC) were operationalised in line with theGovt. of India's EASE program in order to strengthen the credit processes including creditorigination appraisal underwriting and processing. These CLPCs are manned withspecialist workforce to improve credit quality and Turn Around Time (TAT). CLPCs have alsoensured robust internal systems processes and efficient monitoring through segregation ofpre- and post- sanction responsibilities qualitative credit assessment and efficientmonitoring. 18 CLPCs were opened all over India to ensure improved turnaround time andqualitative credit assessment.

• Besides the above initiatives like revamping of Marketing Structuredigitization of Trade Finance operations branch rationalization and strengtheninginspection & audit system were also undertaken.

C. ASSET QUALITY

Recovery of stressed assets continues to be one of the top priorities for the Bank. Asa result of focused efforts in this direction Gross NPAs of the Bank declined to Rs.78473 crore as at 31st March 2019 from Rs.86620 crore in 31st March 2018. Similarly NetNPAs declined to Rs.30038 crore as on 31st March 2019 from Rs.48684 crore in Mar'18. Interms of ratios Gross NPA ratio declined to 15.50% from 18.38% in Mar'18 and Net NPAratio declined to 6.56% from 11.24% in Mar'18. Provision Coverage Ratio (PCR) improved to74.50% as on 31st March 2019 from 58.42% in 31st March 2018. Besides fresh advances havebeen made in better rated accounts to improve the asset quality.

Initiatives taken to Improve Asset Quality during FY'19

• Stressed Assets Management Vertical (SAMV) was created for enhanced and timelyrecovery through a dedicated specialized and motivated team spread all across thecountry.

• During FY'19 a new scheme was launched namely "Special Scheme for OneTime Settlement for NPA accounts 2018" for accounts with balance outstanding up toRs. 25 crore empowering various field level functionaries to accelerate recovery in thissegment. Under the said scheme 53255 OTS proposals were approved.

• A scheme for Recovery in Specifically Identified Accounts was also launchedfrom 05.12.2018 to 31.03.2019. The accounts identified for the scheme carried 100%provision.

• A specialized online OTS portal was launched for real time monitoring of OTSproposals and Specialized Asset Recovery Management Branches were created as part of thevertical for management of NPA accounts with exposure more than Rs 50 lakh.

• Bank also organized Mega Rin Mukti Shivirs for giving impetus to recoveryespecially in small advances to expedite the pace of settlement.

• Concept of "Recovery Champions" was introduced to felicitate theoutstanding performers in the field of recoveries in NPA accounts on monthly and yearlybasis.

• Bank also took initiative in identifying Wilful Defaulters and notices wereissued to various borrowers who were found to have committed an act of Wilful Default. Asa result as on 31.03.2019 1142 borrowers were declared as Wilful Defaulters.

• Key Responsibility Areas (KRAs) were formalized for staff working in ARMBsrecovery teams at CO/ZO level and in the 50 identified branches having large concentrationof NPAs.

• Recovery War room set up last year comprising of 5 senior officers is inoperation for constant and vigorous follow up with field staff on daily basis.

• Bank took another constructive initiative "Mission Gandhigiri"to put moral pressure on the defaulters to payout/clear the dues. It included a peaceful dharnabefore the Borrowers' place.

• Bank has been running successfully e-Auction portal for sale of assets underSARFAESI Provisions. It resulted in quick hassle free and undisputed realization of saleof securitized asset.

D. INFORMATION TECHNOLOGY AND DIGITALIZATION

In today's digitalized world with an unprecedented penetration of internet it is veryimperative to be tech savvy. In alignment with Government of India's initiative of aDigital India Bank has incorporated digitization at all levels and across all customersegments to provide a seamless banking experience. Against a target of 71 crore DigitalTransactions for the financial year 2018-19 Bank has achieved 85.4 crores digitaltransactions (120% of the target) in Feb 2019 itself against the ambitious target set upby MeitY.

Alternative Delivery Channels

a) Internet Banking Services (IBS): As on 31st March 2019 Bank showed a YoY growthof 21% in respect of IBS users. Bank has introduced Overdraft (OD) against Fixed Deposit(FD) through Internet Banking Account .

b) Mobile Banking: As on 31st March 2019 there is a YOY growth of 55% users inmobile banking application of the Bank. With an aim to provide superior customerexperience and simplified banking Bank has recently launched a unified mobile application"PNB One" to facilitate multiple features through single platform. This all-in- one application allows users to transfer funds view account statements managedebit card & credit card and many other value added services at fingertips.

c) ATMs: In order to cater to the banking needs of customers Bank has a vastNetwork of 9255 ATMs across the country and a strong card base of more than 7.42 crore.

Digital Initiatives during FY'19

Bank has been a pioneer in providing 100% CBS solutions in the banking industry acrossthe country. All the bank's service outlets/centers are working under CBS therebyextending convenient "anywhere anytime banking" to all customers.

Few of the digital initiatives taken during the year are enlisted below:

• Bank has recently launched NCMC Debit Card as per GOI directives which wouldenable a single interoperable digital payment mode in Metros Railways and Bus services tofulfill Govt. of India's vision of "One Nation One Card". Besides PNB DAVUnited Co branded Debit Card has also been launched during the year.

• The Bank has revamped the Rakshak plus Debit Card which will be providingadditional befifit to Customers who are serving in Indian Army /Navy/Airforce & IndianCostguard.

• Bank last year opened a Digital branch under the brand name of"DigiHut" under the concept "Do it yourself. During FY'19 4 more DigiHutswere opened.

• The Bank was selected as Digital partner in Kumbh Mela 2019 the biggestreligious congregation at Prayagraj wherein Bank provided services of its patentedproduct E Rupaya for digital payments Mobile ATMs and Cash Deposit Machines to thepilgrims.

• The Bank has integrated with NPCI to work as an operating unit under Bharat BillPayment Operating Unit (BBPOU) and it was made live in September 2017. Now the Bank isworking as BBPOU-CU as well as BBPOU-CU on BBPS platform as the Bank started on-boardingof Merchant bill unit.

E. MANAGEMENT INFORMATION SYSTEM

Enterprise-wide Data Warehouse (EDW) has been successfully implemented in the Bankand has evolved into a single source of data catering to numerous requirements related todata/reports of the Bank facilitating meaningful decision making at all levels of theBank.

Data Analytics: Data Analytics activities have been carried out with an objectiveof business development and sustainability by taking more accurate and informed decisionsbased on analytical studies on various topics/ products. Various analytics studies ofdescriptive and predictive nature were carried out during the year.

F. BRANCH AND OFFICE NETWORK Domestic Network

The Bank has one of the largest networks of 6989 branches as on 31.03.2019 comprisingof 1280 Metropolitan 1387 Urban 1727 Semi Urban and 2595 Rural branches.

Rural and Semi Urban Branches (RUSU) comprise around 62% of the Total Branch Network.

International Presence

At present Bank has its overseas presence in 6 countries by way of 2 branches (1 HongKong & 1 Dubai) 2 Subsidiaries (London & Bhutan) 1 Associate (at Kazakhstan) 1Joint Venture (at Nepal).

G. INTERNATIONAL BANKING

At present the Bank has 145 branches authorised to handle Foreign Exchange Businessand 2 Trade Finance Centres at New Delhi & Chennai specialized in centralized handlingof trade transactions. The Bank also has Specialized Export Permission (SEPs) branches atmajor export centres for extending services to the Import/Export customers. Besides Bankhas 21 Exchange Bureaus at important tourist centres to facilitate encashment of ForeignExchange Currency Notes/Traveller Cheques by foreign tourists/NRIs.

The Bank is having International Service Branch (ISB) at New Delhi for handling InwardRemittances for the Bank as a whole. During FY'19 the Bank has handled remittancebusiness of Rs.46336 crore. The Bank also has Rupee Drawing Arrangements (RDA) with 32exchange Houses (24 in the Gulf 2 in Singapore 2 in the USA 1 each in UK AustraliaCanada and Japan) to facilitate remittance from NRIs. Apart from this the Bank also hasremittance arrangements under Money Transfer Service Scheme (MTSS) with 2 Money TransferOrganisations Worldwide.

H. BUSINESS DIVERSIFICATION

Insurance Business

Life Insurance: The Bank mobilized premium of Rs. 2226 crore from 135957policies as against total premium of Rs.1728 crore mobilized during FY'18 thus showing agrowth of 28.82 %.

The Bank's earnings from Life-Insurance business during FY'19 amounted to Rs.178 croreas against Rs.144 crore during FY'18 showing YoY growth of 23.61%.

Total business mobilized under Life Insurance business since inception is Rs.8106crore from 813068 policies and total earning amounted to Rs.679 crore.

Non Life Insurance: Under the Non-Life Insurance the Bank has a tie-up with TheOriental Insurance Company Limited The New India Assurance Company Limited Bajaj AllianzGeneral Insurance Company Limited & Religare Health Insurance Company Limited (Standalone Health Insurance).

The Bank's Gross written premium stood at Rs. 357 crore from 8.30 lakh policies forFY'19 vis-a-vis Rs.262 crore from 7.12 lakh policies for FY'18. Further the revenueearned during FY'19 was Rs. 48 crore as against Rs. 36 crore during FY'18 showing agrowth of 34%. 217356 health insurance policies were sourced in FY'19 as against212612 policies sourced in FY'18.

Mutual Funds: The Bank is distributing and marketing Mutual Fund productsof Principal Asset Management Pvt. Ltd UTI Asset Management Company Ltd Reliance NipponLife Asset Management Company Ltd TATA Asset Management Company Ltd Aditya Birla SunLife Asset Management Company Ltd. and LIC Asset Management Company Ltd. During Fy'19 theBank mobilized a sum of Rs. 3445 crore.

Depository Services: The Bank was awarded "Top Performer in NewAccount opened" under Bank category from NSDL as Depository Participant. As aDepository Participant bank opened 47582 Demat accounts in FY'19.

Merchant Banking: During FY'19 Bank handled more than 176974 ASBAapplications against 139 issues.

Credit Card: Bank is holding a leading position in the banking Industrywith a customer base of 3.34 lakh in credit cards as on 31.03.2019. To enhance thesecurity level of the credit cards the Bank is issuing only EMV Chip cards with PIN.Issuance activity became an independent profit centre. Profit from credit card issuancebusiness increased from Rs.25 crore as at 31.03.2018 to Rs. 47 crore as on 31.03.2019.

During FY'19 the Bank implemented Long Code Pull SMS facility for customerconvenience. The Bank also introduced Instant Issuance Credit Card & Debit Card kiosksat Digi-hut branches for instant issuance of cards to walk-in customers.

Merchant Acquiring Business: The Bank is undertaking merchant acquiringbusiness through various platforms including Point of Sale (POS) Quick Response Code(BHIM/Bharat QR Code) BHIM Aadhar Pay and Internet Payment Gateway. Punjab Govt. FoodProcurement business through PUNGRAIN was also undertaken successfully.

A total of 47463 merchants on various platforms were on-boarded through POS QR &BHIM Aadhaar.

New Initiatives during FY'19

• Lead Tracking System (LTS) was implemented for generation of merchant leads fromfields on various platforms and facilitating centralized reporting reducing turn aroundtime TAT.

• De-installation and re-mapping of accounts for merchants were facilitatedthrough LTS.

• Personal Executive (PE) Model was introduced to maintain long term relationshipwith High Networth Individuals (HNIs)

• A new version of "Performance Mirror" portal for tracking progress ofPEs mapped was brought into effect.

• IT integration with PNB Metlife India Ltd. for online payment through"PAYPREM" was made live.

I. GOVERNMENT BUSINESS

In order to focus on Govt. business various new initiatives were implemented in theBank. The Bank has been increasing tie-ups with various State Governments for capturingtheir transactions through e-GRAS (Government Receipts Accounting System) whichfacilitates the Taxpayers to make payments due to the Government such as Sales tax Roadtax Taxes and Duties including penalties. This was enabled in the States/UT ofChandigarh Rajasthan and Jharkhand etc. Bank has also successfully integrated withNational Health Authority for PMJAY (Prime Minister Jan Aroyogya Yojna) Scheme. The Bankwas one of the two public sector banks integrating with them.

Bank launched a tax collection campaign and tied up with GeM(Government Market Place)for integration with the Bank's systems for seamless e-procurement by Governmentdepartments. During FY'19 the Bank launched PPF campaign during the months of Dec 2018 toMarch 2019 and more than 1.20 lakh new PPF accounts were opened during the campaign.

Apart from the above the Bank signed MoU with India Post Payments Bank(IPPB) fortechnical support and offering retail loan products at very attractive rates to DakSewaks. The Bank digitized the Prayagraj Kumbh Mela 2019 through PNB e-Rupaya card forwhich PNB was accorded the status of Digital Partner for the entire event lasting for twomonths where approximately 2.5 crore pilgrims visited.

Some of the initiatives taken up by the Bank under Govt. Business during the year aregiven as under:

1. Defence Bank Cell (DBC) at HO and Veteran Facilitation Centres created at variousplaces Pan India as part of the strategy to garner defence accounts (salary and pension)and to facilitate Veterans by attending to their queries for on the spot resolution.

2. A CPPC (Central Pension Processing Centre) set up within PCDA (P) Allahabad forhandling all new defence pension accounts. This is an effective marketing tool withoutincurring additional cost and will boost Defence business.

3. Systems have been customized for sending SMS alert for submission of LifeCertificate credit of pension with details automatic release of additional old agepension and restoration of commutation.

4. Customized pension processing through CBS has been enabled for smooth accurate andtimely processing.

5. The Rakshak Scheme has been revamped as the Rakshak Plus Scheme with severalenhanced facilities for Defence and Para Military Forces including increased PersonalAccident Insurance and Air Accident Insurance. Presentations are being given at variousMilitary Establishments to disseminate the information regarding this scheme so thatmaximum defence personnel can avail of it.

6. A MoU was signed with Everest Bank Limited (EBL) Nepal to extend special bankingfacilities to Nepal Domiciled Gorkha soldiers of Indian Army (serving and pensioners)having Rakshak Plus accounts.

7. Presentations are being given at Army and Air Force establishments to prospectivedefence veterans with regard to the avenues/ financial products available to them forinvesting their funds.

8. Payments to the beneficiaries have been facilitated under Pradhan Mantri Kisan NidhiYojna through system integration.

9. System integrated for online process for Sukanya Samridhi Accounts PPF accounts.

10. Bank has also become POP (Point of Presence) for online opening of accounts underNPS (National Pension Scheme).

J. TREASURY OPERATIONS

Gross Investment of the Bank as on 31st March 2019 stood at Rs 2.01 lakh croreincreasing from Rs 2.00 lakh crore as on 31st March 2018. The Interest income frominvestment portfolio increased to Rs.13941 crore as in FY'19 from Rs 13806 crore inFY'18.

The Bank actively traded in sovereign bonds Non-SLR bonds and equity throughout thefinancial year. The liquidity position of the Bank was comfortable during first H1 FY'19.However during second half of FY'19 system liquidity remained neutral to negative. TheBank managed the funds through CBLO Repo CD etc. and complied with all the requirementsof CRR/SLR stipulated by the Regulator. Total Trading profit (including derivative) stoodat Rs1093 crore in FY'19.

Fixed Income (SLR/NSLR)

During FY'19 the Bank booked trading profit of Rs.747 crore from sale of investmentsin fixed income against Rs.1455 crore during FY'18.

FY'19 started on a positive note witnessed by softening of yields which touched theyear's low. However risks arising due to the impact of Minimum Support Price (MSP) andother factors on inflation along with higher crude oil prices weighed on the bond market.Continuous rise in crude oil prices and rupee touching an all time high dampened themarket sentiments in the first half of the financial year. Additionally US yields surgedto a level unseen in the past several years which weighed on the bond market and causedyields on the domestic bonds to harden further.

Equity

The Bank booked Gross Profit of Rs193 crore in FY'19. The profit included profit ofRs107 crore arising from stake sale in ICRA. The dividend income for FY'19 stood at Rs 149crore.

Forex

Rupee had started its journey from Rs.65 per Dollar on April 2018 and touched an alltime high of Rs.74.48 during the month of October 2018 due to high international Oilprices. There was wide fluctuations due to global factors requiring RBI intervention. NetForex income has increased from Rs.1790 crore in FY'18 to Rs.1881 crore in FY'19 onaccount of better utilization of foreign currency resources in hand.

K. CUSTOMER CARE

The Bank fully realizes the importance of customer service and continues to lay utmostpriority to rendering prompt and efficient service to customers. In order to achieve thedesired objective the Bank has formulated a robust Grievance Redressal Policy.

Initiatives undertaken during the year for improvement in customer service:

• The Bank has an On-line Grievance Redressal Management Portal called CentralizedGrievance Redressal Management System (CGRMS). Customers can lodge theirrequests/complaints in the CGRMS through Bank's website Internet Banking Service MobileBanking Service and Mobile App. Complaints are also received at Head Office all theCircle Offices and over 1856 SAP-CRM enabled branches. These are entered in CGRMS.Through this system the customer gets an immediate automatic acknowledgement and can keepa track of the complaint also.

• The Bank has state-of-the-art Contact Centers at Gurgaon and NOIDA to providetele-banking services to its customers on 24 x 7 x 365 basis through two leading ServiceProviders. In addition to these two Primary Sites the Bank has also established twoSecondary Contact Centers at Hyderabad and Bhopal to provide tele-banking services to itscustomers in 11 languages. The number of services extended by Contact Centre through TeleBanking increased from 6 to 25 during FY'19 thereby making them more customers friendly.

• The Bank has constituted teams of officials at Customer Care Centre at HeadOffice Circle Offices and Zonal Offices to pay incognito visit to branches to assessstandard of service. During FY'19 officials of the Bank made 7575 incognito visits tobranches pan India and deficiencies pointed out were taken up for taking corrective stepsto improve customer service.

• The status of complaints received by the Bank is reviewed by "CustomerService Committee of the Board" a Sub-Committee of the Board on quarterly basis.The meetings of the Sub-Committee are presided over by the Managing Director and CEO.

• The Bank has a "Standing Committee on Customer Service" whichalso reviews customer service of the bank as well as implementation of the Code of Bank'sCommitments to Customers of Banking Codes and Standards Board of India (BCSBI).

• The Bank has in place an Internal Ombudsman as per the recommendations ofthe Damodaran Committee. The system ensures greater transparency in the redressal ofgrievances by the Bank.

• Customer Service Committees in all the branches and Circle Offices look into thequality of customer service rendered and critically examine the feedback/ suggestions forimprovement in customer service. These committees meet once in a month where staff and theinvited customers interact freely on service related issues.

• Theme Based Meetings are conducted at monthly intervals in all branches on apre-decided date and theme to improve awareness among field staff about bank's productsand services and to sensitize them about the issues of maximum importance.

Out of a total number of 64401 complaints (i.e.1862 complaints outstanding as on01.04.2018 and 62539 complaints received during FY'19) 63435 complaints were resolvedup to the satisfaction of the complainant till 31st March 2019.

L. IMPLEMENTATION OF OFFICIAL LANGUAGE

Your Bank accomplished various parameters fixed by the Govt. of India Ministry of HomeAffairs Deptt. of Official Language for FY'19. The Bank is using ‘Unicode' fonts forHindi correspondence etc. at all levels.

During FY'19 the Bank was awarded several prizes for its excellent performance in theuse of Hindi which included the prestigious First prize namely ‘Rajbhasha KirtiShield' the top most prize scheme of Government of India. The Bank was awarded 12prizes in the field of Rajbhasha during FY'19 from Government of India Ministry of HomeAffairs and Rajbhasha Vibhag which is a record of sorts.

In addition to this Town Official Language Implementation Committees situated indifferent locations of the country and other Non-Government Organizations also awarded 106prizes in region ‘A' 24 prizes in region ‘B' and total 13 prizes in region‘C' to our bank. Our staff members have also received 120 prizes on individual basis.During the FY'19 the third sub-committee of Parliament on Official Language visited ourBranch Office- Srinagar (Garhwal) Circle Office-Surat and Circle Office-Indore. Draftingand Evidence Sub-Committee of the Committee of Parliament on Official Language inspectedthe Zonal Office-Delhi Circle office-Mumbai and Branch Office-Palwal.

During the FY'19 also the Bank celebrated ‘Hindi Month' during Sept. 2018and also organized ‘Hindi Diwas' on 14th Sept. 2018. Severalprogrammes/competitions were organized and awards & prizes were given during themonth.

M. PNB SUBSIDIARIES AND REGIONAL RURAL BANKS DOMESTIC

i) PNB Gilts Limited: Debt market started the year on a bearish note on the backof inflation concerns elevated crude prices and absence of demand for governmentsecurities by investors. This was further accentuated by repo rate changes by RBI.

Despite the heightened volatility Company managed to post a Profit before Tax of Rs.83 crore in FY'19. Additionally Company fulfilled all its obligations as a Primary Dealerin both primary and secondary market. With regard to Treasury Bills commitment theCompany exceeded the stipulated success ratio of 40% achieving 41.16% and 40.40% in H1and H2 respectively. In G-sec category Company fulfilled the underwriting commitmentsthereby supporting the government borrowing program. The Company's total turnover ratio(secondary market) stands at 179 times for treasury bills and 303 times forgovernment-dated securities as on March 312019 against the minimum RBI stipulation of 10times and 5 times respectively.

ii) PNB Investment Services Limited: The Company is a profit making company fromthe first year of its operations. During the year ended March 2019 the Company earned feebased income of Rs. 5.80 crore with a total income of Rs.8.70 crore as against a fee ofRs. 6.00 crore and total income of Rs. 9.20 crore respectively for the year ending March2018. Profit before Tax during the period ending March 2019 was Rs. 2.41 crore as againstRs. 3.90 crore for the period ending March 2018.

Post withdrawal of RBI Guidelines on Stressed Assets w.e.f. 12th February 2018 therewas a significant decline in debt restructuring assignments for the entire FY'19 therebyimpacting the overall revenue. The Company took initiative to develop and strengthen thedebt syndication business in the period under consideration. During FY'19 PNBISL wasinvolved in successfully executing four non core

asset disinvestment mandates on behalf of PNB. The trusteeship business of the companyrecorded steady growth in number of clients in FY'19.

INTERNATIONAL

iii) PNB International Limited (PNBIL): PNBIL is focusing on diversifying theloan book through syndicated loan and financial institution business apart from providingnew products and services to the community with emphasis on non-lending revenue fromremittance business. It is also strengthening its technology platform to offer MobileBanking and online remittance facilities to the customers in UK. Having reduced the legacyportfolio and having prudent risk management in place PNBIL has also strengthened thegovernance practices in the Bank.

PNBIL is having customer deposit of $723mn and advances of $917mn. The Operating Profitbefore provision tax and dividends for FY'19 stood at $16.43 mn which is higher from$11.93 mn in FY'18. Total income for FY'19 stood at $47.02 mn and Net interest Income wasat $33.53 mn.Net trading income stood at $1.3 mn for FY'19. Net profit (before tax) forFY'19 was $7.37mn against $5.89 mn of FY'18.

With Brexit impacting the UK economy businesses and investors are adopting a cautiousapproach resulting in subdued demand in general thereby impacting overall credit demand.

iv) Druk PNB Bank Limited: Total business of the Bank as on 31.3.2019 increasedto Rs. 2141 crore from Rs.1726 crore as on 31.3.2018 showing a YOY growth of 24.04%. Thenetwork of the subsidiary comprises of 7 branches and 22 ATMs. On the profitability frontthe subsidiary showed good earnings and the profit of the Bank has increased from Rs.19crore during FY'18 to Rs. 28 crore during FY'19 registering a growth of 45% on YoY basis.During FY'19 the Bank successfully increased its paid up capital from Rs.45 crore toRs.70 crore through rights issue. The Bank also migrated to Finacle10x and integrated itsSwift operations with Core Banking Solution (CBS).

v) REGIONAL RURAL BANKS (RRBs)

At present five RRBs are sponsored by the Bank which are operating in fiveStates namely Bihar Haryana Himachal Pradesh Punjab and Uttar Pradesh covering 93 districtswith a network of 2937 branches.

Total Business of PNB sponsored RRBs as on 31.03.2019 stood at Rs.91293 crore. TotalDeposits of RRBs were Rs.56546 crore and advances were Rs. 34747 crore as on 31.03.2019.All PNB Sponsored RRBs remained in Profit and combined Net Profit of RRBs during theperiod ended Mar'19 stood at Rs.185.96 crore. RRBs have cumulatively opened 5881415accounts under Pradhan Mantri Jan Dhan Yojana (PMJDY) as on 31.03.19. RuPay ATM cards wereissued to 3718902 account holders.

Financial Performance of RRBs as on 31.03.2019 (Un-audited)

SI. Performance of RRBs 31st Mar'18 (Audited) 31st Mar'19 (Un-Audited) YoY Growth %
1 Aggregate Deposits 51843 56546 9.07
2 Aggregate Advances 31250 34746 11.19
3 Aggregate Net Profit 246 186 -24.32
4 Branches under CBS 100% 100%
5 Profit Per Employee (Rs lakh) 2.08 1.52 -26.90
6 No. of Loss Making Branches (being 12 month old or more) 160 72

N. AWARDS AND ACCOLADES

Despite being a challenging year your Bank has been able to perform well and engineerturnaround in the shortest possible time. The Bank also continued to restructure itsbusiness model to remain competitive and profitable in the times to come. All theseefforts of the Bank were recognized at various platforms and also brought the Bank manylaurels.

PNB was adjudged overall "Best Performing Bank" among all PublicSector Banks under EASE (Enhanced Access & Service Excellence) an agenda ofreforms launched by DFS Govt. of India. In addition the Bank received recognition infour out of the six key themes envisioned under EASE i.e. Customer Responsiveness(Winner) Responsible Banking (Winner) Credit Off-take (Winner) and Deepening FinancialInclusion & Digitalization (Runner Up) based on an independent assessment by BostonConsultancy Group.

In addition to the above the Bank has been recognized as "Best in FinancialInclusion" by Business Today and KPMG. Further the UIDAI Govt. of India hasalso acknowledged our efforts by awarding "Aadhar Excellence Award" asthe 2nd Best Performing Public Sector Bank in terms of Aadhar Generation and Update.The Bank has also been bestowed with the "IBA Banking Technology Award 2019" for"Most Customer Centric Initiatives Using Technology (Runner Up) among largeBanks". In appreciation of efforts NSDL Delhi adjudged the Bank as "BestPerformer in Account Growth Rate (Top Depository Participant)"and "Top Performerin New Accounts opened (Bank Category)". Top Rankers Management Club conferred"Top Rankers Excellence Award for Entrepreneurial Path Breaker" to the Bank.

Recently Bank was also recognized as "Best Bank For Corporate SocialResponsibility" and bestowed with Asiamoney Banking Awards 2019.

In the Forbes survey for assessing "The World's Best Banks 2019" in terms ofcustomer satisfaction ratings PNB was ranked 2nd among all Public Sector Banks & 7thamong 30 Banks (including Private and Foreign Banks) in India. The survey was carried inpartnership with market research firm Statista by surveying more than 40000 customersacross 23 countries around the globe. Customers were asked to rate banks on overallrecommendation and satisfaction as well as 5 key attributes or ‘sub-dimensions' of1) trust 2) terms and conditions 3) customer service 4) digital service and 5) financialadvice.

O. FUTURE BUSINESS PLAN OF THE BANK

Bank's performance in FY'19 despite the challenges is a testimony to our continuedresilience. Going ahead this gives us the confidence that Bank will carry forward theperformance momentum. Bank will continue its focus on best customer service improvementin quality of assets building a strong IT platform rationalizing costs and expanding itsdimensions. We will realign our business model to capture opportunities strengthenbalance sheet increase revenue pool further our digital agenda by launching newinnovative products to press ahead with customer journeys and become more data-driven.These initiatives will enable us to forge ahead in our quest to re-imagine bankingregister higher business growth and achieve efficiency and profitability.

The Bank has always perceived employees as its most valuable assets. In order todevelop human capital key focus areas include succession planning developing a talentpool for critical positions leadership development besides continuously recruiting andtraining staff to augment skill set. We value the diversity in our team and stronglybelieve in reverse mentoring as younger employees come with diverse learnings & skillsand their presence adds pace fresh perspectives and new ideas to address changes andchallenges.

We shall continue to make important progress in transforming the bank through thetransformation exercise Mission Parivartan. Bank has a portal Lead the PARIVARTAN thatencourages employees to pitch in ideas for improving performance. Bank ensures that theworkable ideas are translated into action and execution. Several new ideas have beenimplemented and going forward we intend to continue with the drive.

We have the strength of numbers with the largest branch network a loyal customer baseof over 11 lakh 70000 dedicated employees determined to carry forward the success storyof our decades of service to the nation and customers. Our vision in the next phase ofgrowth is to make this strength of numbers count more and more through quick response andinnovation to deliver simple fast and contextual banking in the digital age. As we stepinto 125th year of service we remain committed to strengthening the legacy of PNB bystaying true to our core values and key tenets upon which our Bank is founded enhancingour role and commitment towards People and Nation building.

P. BOARD OF DIRECTORS

Board of the Bank compromises of 9 Directors including 3 whole time Directors i.e. OneManaging Director & CEO and two Executive Directors as on 31.03.2019. During FY'19the following changes took place in the composition of Board of Directors:

• Ms. Hiroo Mirchandani Director under Shareholder category completed her tenureon 01.05.2018.

• Dr. Asha Bhandarker has been elected as Shareholder Director on the Board of theBank for a period of three years w.e.f. 12.09.2018.

• Shri Sudhir Nayar Director under Shareholder category completed his tenure on18.12.2018.

• As per DFS notification F. No. 16/13/2018-BO.I dated

18.01.2019 Shri K. V. Brahmaji Rao cease to be the Executive Director of PNB w.e.f.18.01.2019.

• As per DFS notification F. No. 16/13/2018-BO.I dated

18.01.2019 Shri Sanjiv Sharan cease to be the Executive Director of PNB w.e.f.18.01.2019

• Shri Agyey Kumar Azad was appointed as Executive Director on Board of the Bankw.e.f. 22.01.2019.

The Board wishes to place on record its appreciation for the valuable contribution madeby Ms. Hiroo Mirchandani and Shri Sudhir Nayar.

Q. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors confirm that in the preparation of the annual accounts for the year ended31st March'19:

• The applicable Accounting Standards have been followed along with properexplanation relating to material departures if any;

• The accounting policies framed in accordance with the guidelines of the ReserveBank of India were consistently applied;

• Reasonable and prudent judgment and estimates were made so as to give a true andfair view of the state of affairs of the Bank at the end of the financial year and of theprofit of the Bank for the year ended 31st March'19;

• Proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of applicable laws governing banks in Indiaand;

• The accounts have been prepared based on the principle of "goingconcern".

R. ACKNOWLEDGEMENT

The Board expresses its thanks to the Government of India Reserve Bank of IndiaSecurities and Exchange Board of India Stock Exchanges Bank's customers Public and theShareholders for valuable support continued patronage and confidence reposed in the Bank.

The Board wishes to place on record its appreciation for the valuable contribution madeby the Bank's staff at all levels and looks forward to their continued involvement inachieving the future goals.

For and on behalf of Board of Directors

Sunil Mehta

Managing Director & CEO


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