Punjab National Bank - Quarterly/Annual Result Disclosures and Notes dated 30 Jun 2022

1. The above financial results have been reviewed by the Audit Committee of Board and approved by the Board of Directors in their respective meetings held on July 28, 2022. The same have been subjected to limited review by the Statutory Central Auditors of the Bank, in line with the guidelines issued by the Reserve Bank of India and as per the requirements of Securities & Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended.



2. The financial results of the Bank have been arrived at after considering provisions for non-performing assets, standard assets, restructured advances, stressed sector accounts, standard derivative exposures, direct taxes including deferred tax, unhedged foreign currency exposure, provision for employee benefits and investment depreciation on the basis of extant guidelines issued by Reserve Bank of India and applicable accounting standards issued by The Institute of Chartered Accountants of India. Other usual and necessary provisions for the quarter have been made on estimated basis and are subject to adjustments, if any, at the year end.



3. The financial results for the quarter ended June 30, 2022 have been prepared following the same Accounting Policies and practices as those followed in the annual financial statements for the year ended March 31, 2022.



4. The Consolidated financial results are prepared in accordance with Accounting Standard 21 on “Consolidated Financial Statements”, Accounting Standard 23 on “Accounting for Investment in Associates in Consolidated Financial Statements” and Accounting Standard 27 on “Financial Reporting of Interest in Joint Ventures” issued by the Institute of Chartered Accountants of India and guidelines issued by RBI.



5. The consolidated financial results of the Group comprise financial results of 5 Subsidiaries and 15 Associates. The consolidated results are prepared in accordance with section 133 of Companies Act, 2013 and regulation 33 of Securities & Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended.



6. In terms of RBI Letter no. DBR.No.BP.15199/21.04.048/2016-17 dated June 23, 2017 (RBI List-1) and Letter no. DBR.BP.1908/21.04.048/2017-18 dated August 28, 2017 (RBI List-2) for the accounts admitted under the provisions of Insolvency & Bankruptcy Code (IBC), the Bank is holding total provision of Rs.8373.94 Crore (Aggregate provision of RBI List 1 and List 2 accounts) as on June 30, 2022 (99.78% of Gross NPA advances).



7. Pursuant to the revision in family pension payable to the employees of the Bank, covered under 11th Bi- Partite Settlement and joint note dated November 11, 2020, the Bank had estimated additional liability of Rs.3093.95 Crore, of which a sum of Rs.1573.79 Crore was amortized during the financial year 2021-22, in terms of RBI Circular no. RBI/2021-22/105 DOR.ACC.REC.57/21.04.018/2021-22 dated October 04, 2021 and unamortized part of Rs.1520.16 Crore has been fully charged to the Profit & Loss Account during the quarter ended June 30, 2022. There is no unamortized expenditure in the Balance Sheet on account of additional family pension.



8. Covid-19 pandemic has adversely impacted the economic activity across the globe including the Indian economy for more than two years. The Bank's results, operations and asset quality, however, have not been much affected because of the pandemic.



9. During the quarter, the Bank has not availed any dispensation in respect of frauds in terms of option available as per RBI Circular No. DBR No.BP.BC.92/21.04.048/2015-16 dated 18.04.2016. Further, out of amount of Rs.1,028.95 Crore which was debited to Other Reserves for the quarter ended March 31, 2022, an amount of Rs.377.75 Crore has been charged to Profit and Loss Account for the quarter ended June 30, 2022 and remaining Rs.651.20 Crore will be charged to Profit and Loss Account in subsequent quarters.



10. In terms of RBI Circular DBR No. BP. BC 45/21.04.048/2018-19 dated June 7, 2019 on Prudential Framework for Resolution of Stressed Assets, the Bank is holding additional provision of Rs.2256.71 Crore as on June 30, 2022 in 18 accounts as detailed below:

(Rs.in Crore)

(a) Amount of loans impacted by RBI Circular (FB+NFB) : 8182.15

(b) Amount of loans to be classified as NPA: 4007.54

(c) Amount of loans as on 30.06.2022 out of (b) classified as NPA: 4007.54

(d)Provision held as on 31.03.2022: 2007.22

(e) Additional provision made during quarter ended 30.06.2022: 249.49

(f) Provision held as on 30.06.2022 : 2256.71



11. The Bank has estimated the liability for Unhedged Foreign Currency Exposure (UFCE) in terms of RBI circular DBOD.No.BP.BC.85/21.06.200/2013-14 dated January 15, 2014 and is holding a provision of Rs.86.00 Crore as on June 30, 2022 (Rs.84.75 Crore as on June 30, 2021).



12. In accordance with RBI circular no. DBR.No.BP.BC.18/21.04.048/2018-19 dated January 01, 2019 DOR.No.BP.BC.34/21.04.048/2019-20 dated February 11, 2020 and DOR.No.BP.BC/4/21.04.048/2020-21 dated August 06, 2020 on "Micro, Small and Medium Enterprises (MSME) sector – Restructuring of Advances", the detail of MSME restructured accounts is as under:

(Rs. in Crore)

No. of Accounts Restructured Amount involved Provision held

11543 1017.04 50.85



13. In accordance with RBI circular no. DOR.STR.REC.12/21.04.048/2021-22 dated May 05, 2021 on “Resolution Framework 2.0 - Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs)” the details of accounts restructured is as under:-

(Rs. in Crore)

No. of Accounts Restructured Amount involved Provision held

76501 4782.71 478.27



14. In accordance with RBI circular no. DOR.STR.REC.51/21.04.048/2021-22 dated September 24, 2021, the details of loans transferred/acquired during the quarter ended June 30, 2022 are given below:



i. The Bank has not transferred and acquired any loans not in default or Special Mention Accounts (SMA).

ii. The Bank has not acquired any non-performing assets.

iii. Details of non-performing assets (NPAs) transferred:



(all amounts in Rs. Crore) To ARCs To permitted transferees To other permitted transferees

No. of accounts Nil Nil Nil

Aggregate principal outstanding of loans transferred Nil Nil Nil

Weighted average residual tenor of the loans transferred Nil Nil Nil

Net book value of loans transferred (at the time of transfer) Nil Nil Nil

Aggregate consideration Nil Nil Nil

Additional consideration realized in respect of accounts transferred in earlier years 0.60 Nil Nil

Quantum of excess Provision reversed to the Profit & Loss account on account of sale of stressed loans Nil Nil Nil



Distribution of the SRs held across the various categories of Recovery Ratings assigned to such SRs by the credit rating agencies as on June 30, 2022:



Recovery Rating Band Book Value

(Rs. in Crore)

RR1+ 0.00

RR1 406.97

RR2 332.17

RR3 376.47

RR4 406.37

RR5 3.41

Rating Withdrawn 98.79

Total 1624.18

As per RBI guidelines, post 8 years Rating is not applicable.



15. The Provisioning Coverage Ratio as at June 30, 2022 works out to 83.04% (80.26% as at June 30, 2021).



16. Other income includes income (including commission) from non-fund based banking activities, fees, earnings from foreign exchange, profit/loss on sale of assets, profit/loss (including revaluation) from investments, dividends from subsidiaries, recoveries from accounts written off, etc.



17. As per RBI Circular RBI/2022-23/19 DOR.AUT.REC.12/22.01.001/2022-23 dated April 7, 2022, for the purpose of disclosure under Accounting Standard 17, Segment Reporting, “Digital Banking Segment” has been identified as sub-segment under Retail Banking by Reserve Bank of India (RBI). However, as the proposed Digital Banking Unit (DBU) of the Bank has not yet commenced operations and having regard to the discussions of the DBU Working Group formed by Indian Bank’s Association (IBA) (which included representatives of Banks and RBI), held on July 14, 2022, reporting of the Digital Banking segment as a separate sub-segment of Retail Banking Segment will be implemented by the Bank based on the decision of the DBU Working Group.



18. The Bank has evaluated the options available under section 115BAA of Income Tax Act, 1961 and opted to continue to recognise the taxes on income for the quarter ended June 30, 2022 as per the regular provisions of Income Tax Act, 1961.



19. During the quarter, the Bank has revalued a class of assets resulting in net revaluation gain of Rs 1257.62 Crore, which has been recognised in Reserves and Surplus.



20. In terms of RBI circular no. DBR.No.BP.BC.1/21.06.201/2015-16 dated 01.07.2015 read together with RBI circular DBR.No.BP.BC 80/21.06.201/2014-15 dated March 31, 2015, banks are required to make Pillar 3 disclosures under BASEL III capital regulations. Accordingly, Pillar 3 disclosures under BASEL III capital regulations are being made available on Bank's website i.e. www.pnbindia.in. These disclosures have not been subjected to limited review by the Statutory Central Auditors.



21. Details of Investors complaints for the quarter ended June 30, 2022: Pending at Beginning: Nil, Received: 09; Disposed off: 08; Closing: 01.



22. In accordance to SEBI regulations, for the purpose of quarterly consolidated financial results, minimum eighty percent of consolidated revenue, assets and profits have been subjected to limited review.



23. The figures of the last quarter of the previous year are the balancing figures between audited figures in respect of financial year 2021-22 and the published year to date figures up to the end of the third quarter of the previous year.



24. Figures of the previous periods have been regrouped / rearranged / re-classified wherever necessary to conform to current period's classification.