
Punjab National Bank (PNB), India’s second-largest state-owned bank by assets, plans to recover ₹1.7 trillion ($1.96 billion) in bad loans during the current financial year. The bank aims to collect nearly one-third of this amount between January and March 2025, according to CEO Ashok Chandra.
Focus on Large Corporate Accounts
PNB expects to recover these funds from major corporate loan accounts that were previously written off. However, the CEO did not disclose specific names of these accounts.
PNB has significantly improved its asset quality in the past two years, overcoming challenges from the corporate bad loan crisis (2011–2019) and the financial strain caused by the COVID-19 pandemic. In the 2023-24 fiscal year, the bank successfully recovered ₹2.01 trillion in bad loans.
Strengthening Financial Position
The bank has been setting aside additional funds as a safeguard, allowing it to reverse these provisions once loan recoveries are made. This strategy enhances profitability by reducing the financial burden on its balance sheet.
Stock Performance and Asset Quality
Despite the positive financial results, PNB’s shares dropped by 0.2% during a special market session for the federal budget on Saturday. The stock has declined 1.6% in 2025 so far, compared to a 3.1% drop in the state-run banking sector index.
The bank’s gross non-performing asset (NPA) ratio, a key measure of asset quality, improved to 4.09% by December-end, down from 4.48% in the previous quarter.
Higher Recovery Targets for Current Quarter
Recoveries from bad loans were ₹34 billion in the December quarter, which the CEO described as “muted.” However, the bank expects an increase to ₹50 billion-₹60 billion in the current quarter, supported by inflows from insolvency proceedings and one-time settlements.
Loan Growth and Interest Margins
PNB has a corporate loan book of ₹1.15 trillion but faces challenges related to loan pricing. The bank aims to maintain a net interest margin between 2.9% and 3.0% for the fiscal year, slightly lower than the 3.09% recorded in the December quarter.
Revised Growth Targets
The bank has raised its loan growth target to 13%-14% from an earlier estimate of 11%-12%. Similarly, it has increased its deposit growth target to 12%-13%, up from 9%-10%.
During the December quarter, PNB’s loans and deposits grew by 14% and 14.4% year-on-year, surpassing most of its peers. The bank attributes this strong performance to its extensive network and aggressive expansion strategy.
PNB operates more than 10,000 branches across India, making it one of the largest banking networks in the country.