PNB shifting gears to become IT-driven banking powerhouse: Goel

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Betting big on digital technology, Punjab National Bank (PNB), the country’s second-largest public sector bank, plans to accelerate its digital and HR transformation journey as part of its overall efforts to evolve into a digital-focussed new age banking behemoth, said Atul Kumar Goel, Managing Director & CEO.

“Our motto is to position PNB as an IT company that provides banking services,” Goel told businessline on Thursday.

For PNB, the three main priorities for the next six months are going to be digital transformation, HR transformation and recoveries, he said.

On the HR transformation front, PNB is building a HR digital platform/module that will take care of the HR needs of its nearly 1 lakh employees.

“We have already hired an external consultant. Entire HR module will be available on digital mode by March 2024, where every performance metric of an employee will be monitored, assessed and appraised digitally,” he said 

PNB, which started its digital journey in June 2022, is keen to accelerate this digital transformation in the next six months, so that it can enhance its operational performance even better and focus energies on recoveries.

“We are doing well on initiatives on digital and HR transformation.  Our initiatives are comparable to the peers in the banking industry. The benefits of these digital and HR transformation initiatives will definitely start flowing into our bank in the coming days”, he said.

PNB is currently faced with gross non performing assets of ₹65,000 crore and technically written off amount of ₹90,000 crore. This has weighed on the bank’s return on assets (RoA), which has been quite low, and is slowly looking up in recent quarters to 0.5 per cent levels.

“Main reason why my RoA is not looking up is my ₹90,000-crore technical write off and ₹65,000-crore GNPA. Nearly ₹1.55-lakh crore of my assets are not earning anything, but I have to pay for the funds raised for these assets. So, if I recover this money, it will make big difference to my RoA in coming days,” said Goel.

He said that PNB, with its vast branch network of 10,000 branches, BC network of 29,000 and huge ATM network, is well placed to grab the opportunities on both liabilities and investment side of its balance sheet. “Our effort is going to be further leverage our branch network, improve CASA in coming days,” Goel added.

co-lending model

Goel also said that PNB has decided to change its model for co-lending, with the bank developing the digital technology (API) and then partnering with NBFCs. The earlier model (where PNB was just seen to bring the customer leads) did not work as expected, and so the shift in strategy, Goel noted.

Asked about the impact of the US 10-year Treasury hitting 5 per cent levels on the Indian economy, Goel admitted that it will have some impact on the Indian market. He pointed out that Indian G-sec had already spiked to 7.37 per cent from 7.11 per cent levels. 

‘It’s rbi’s call’

He, however, felt that interest rates in India are likely to remain stable given the global inflation levels.  “I don’t see interest rates hardening in India although it is entirely for RBI to decide on this,” he said.