Image Source: Deccan Herald
Punjab National Bank (PNB), India’s second-largest public sector lender, is making headlines with a strategic move to offload non-performing assets (NPAs) worth up to Rs 5,000 crore. The bank’s Managing Director and CEO, Ashok Chandra, has outlined a recovery target of at least 50% from this sale, signaling a renewed push toward profitability and operational efficiency in FY26.
Key Developments in the NPA Strategy
PNB has identified over 100 NPA accounts for sale to Asset Reconstruction Companies (ARCs).
The total book size of these accounts is estimated between Rs 4,000 crore and Rs 5,000 crore.
The bank expects to recover a minimum of 40–50% from these sales, with some accounts potentially yielding full recovery due to strong underlying securities.
This initiative is part of a broader recovery strategy aimed at cleaning up the balance sheet and boosting financial health.
Strategic Intent Behind the Move
The decision to sell NPAs is not just about offloading bad loans—it’s a calculated effort to:
Accelerate recovery timelines by engaging ARCs with specialized expertise.
Improve asset quality and reduce provisioning burdens.
Free up capital for more productive lending, especially in high-yield segments.
Chandra emphasized that the bank’s internal processes have been streamlined to ensure swift decision-making, with a commitment to respond to corporate proposals within 15 days. This operational agility is designed to instill confidence among borrowers and partners.
Growth Ambitions: Rs 30 Lakh Crore Business Target
PNB is not just cleaning house—it’s gearing up for aggressive expansion. The bank has set its sights on crossing Rs 30 lakh crore in total business by the end of FY26.
As of June 30, 2025, PNB’s total business stood at Rs 27.19 lakh crore, marking an 11.6% year-on-year growth.
The bank’s official target for FY26 is Rs 29.56 lakh crore, but Chandra believes the Rs 30 lakh crore milestone is within reach.
This would place PNB ahead of Bank of Baroda (Rs 26.43 lakh crore) and Canara Bank (Rs 25.64 lakh crore), reinforcing its position as a leading public sector lender.
Profitability at the Core
Chandra made it clear that growth will not come at the expense of profitability:
PNB recorded its highest-ever operating profit of Rs 7,081 crore in Q1 FY26.
The bank has reduced bulk and corporate deposits to improve margins.
Credit growth is targeted at 11–12%, while deposit growth is expected to be 9–10% this fiscal year.
The bank is also reshaping its corporate loan book, shedding low-yielding advances and focusing on high-return segments. A robust pipeline of Rs 1.29 lakh crore in corporate loans is in various stages of disbursement.
Sectoral Focus and Lending Strategy
PNB’s lending strategy is diversified and growth-oriented:
MSME lending has already grown by 17–18%, and this momentum is expected to continue.
Core retail loans—housing, vehicle, and education—are also projected to grow at 17%.
A dedicated project finance cell, headed by a General Manager, has been established to fast-track infrastructure and industrial lending.
Outlook and Implications
PNB’s dual-pronged strategy—aggressive NPA resolution and ambitious business expansion—reflects a confident pivot toward sustainable growth. By monetizing stressed assets and reinvesting in high-yield sectors, the bank aims to strengthen its bottom line while enhancing its market position.
This move also signals a broader trend in Indian banking, where public sector lenders are increasingly adopting private-sector agility and performance metrics to stay competitive.
Sources: Moneycontrol, Business Standard
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