PNB chief Sunil Mehta says can recover losses from Nirav Modi scam in six months

Punjab National Bank CEO Sunil Mehta on Wednesday said that the bank would recover its losses from the recent LoU fraud within six months. But, how? By working on the bad loans, the bank CEO said in an interview to the Economic Times. The second largest state-run bank has Rs 57,000 crore as non-performing assets or NPAs. Referring to this figure, Mehta said: "NPAs can become a goldmine for the bank and we can bring back profitability. In the last three quarters, we have raised Rs 5,000 crore through QIP route, Rs 1,300 crore from non-crore assets stake sales and Rs 5,473 crore through capital infusion."

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Explaining the process that will help the bank recover its money, the PNB CEO said that the bank would benefit from RBI's recent decision on provisioning for NCLT cases. "The regulator has brought down provisioning for NCLT cases from 50 per cent to 40 per cent, so we unlock that 10 per cent. Further, in the coming quarter we are expecting resolution of some cases in steel sector through the Bankruptcy Code and that will unlock substantial provisions, which will provide us a cushion," Mehta told the ET. Under provisioning norms, the banks are bound to set aside a fixed percentage of their NPAs from their profit.

According to Mehta, the bank will strategically tackle bad loans and monetise its non-core assets. He said: "Wherever resolutions are possible we will do that, we will go for one-time settlement and strategic sale to ARC to raise resources."

The PNB chief may have laid down his plans to deal with the losses, but investigating agencies are still struggling to get scamsters Nirav Modi and Mehul Choksi - duo who cheated the bank of Rs 13,000 crore - bank to India to recover the looted money. Though, the CBI and ED have attached multiple properties of both the billionaire jewellers. The investigating agencies have so far conducted over 250 country-wide searches and attached diamond, gold, precious and semi-precious stones and other movable and immovable assets of worth Rs 7,638 crore.  

In an another interview, the PNB chief suggested that the bank has enough capital and the latest fraud won't affect its business. Earlier this week, the state-owned bank's domestic business turnover crossed Rs 10 trillion for the first time ever in 2017-18. Sharing this news with the employees, Mehta in a letter said: "...while the global business of the bank hovers around Rs 11 trillion, the domestic business of the bank has reached new milestone by crossing Rs 10 trillion registering 7.9 per cent growth for 2017-18."