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PUNJAB NATIONAL BANK

DIRECTORS' REPORT

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You can view full text of the latest Director's Report for the company.

Market Cap. ( ` in Cr. ) 41638.16 P/BV 0.98 Book Value ( ` ) 62.88
52 Week High/Low ( ` ) 100/56 FV/ML 2/1 P/E(X) 0.00
Book Closure 12/07/2019 EPS ( ` ) 0.00 Div Yield (%) 0.00
Year End :2019-03 

DIRECTORS’ REPORT 2018-19

The Financial Year 2019 was a year of reckoning for Punjab National Bank. Despite numerous challenges, your Bank displayed resilience and overcame the adverse impact in the most resolute manner. A series of measures and strategic initiatives were undertaken in the Bank ranging from strengthening of systems, procedures and control measures to realignment of business strategy. Efforts were also channelized towards improving recovery, capital conservation and incorporating structural changes in the Bank.

Due to the swift action and strategy, your Bank could make a good progress and deliver commendable operating performance. The highlight of the performance was addressing of the key challenges, namely improvement in asset quality, improving the operating profit and capital optimization without any adverse impact on its business. There has been an improvement in the crucial performance parameters in FY’19. There has been decline in Gross Non Performing Assets and Net Non Performing Assets helped by record Gross Recovery of more than Rs.20,000 crore in FY’19 as against the Recovery of Rs.9666 crore during FY’18 and YOY increase of 26.2% in Bank’s Operating Profit to Rs. 12995 crore.

The Bank’s Gross Domestic Business increased by over Rs 1 lakh crore during the financial year to reach the landmark figure of Rs 11.45 lakh crore as at March’19 showing a YOY growth of 11.1%. While Gross Domestic Advances recorded YOY growth of 14.1% to reach Rs. 4.91 lakh crore, Domestic Deposits at Rs. 6.54 lakh crore grew YOY by 9.0%. The Bank’s CASA Deposits stood at Rs. 2.85 lakh crore and the share of CASA to Domestic Deposits was at 43.51 %.

To summarize, Financial Year 2018-19 was indeed an eventful year for the Bank, wherein we successfully left the adversity behind reflecting a clear triumph of self belief and trust of our customers and stakeholders. Bank’s performance has been recognized at diverse prestigious platforms and your Bank was adjudged as the ‘Best Performing Bank’ amongst all Public Sector Banks and conferred with “EASE Reforms Excellency’ Award. Besides, in terms of customer satisfaction ratings, your Bank has been ranked 2nd among all Public Sector Banks in India in the recent Forbes magazine survey for assessing "The World's Best Banks 2019”.

Against this backdrop, your Directors have pleasure in presenting the Annual Report of your Bank for the year ended March 31, 2019 (FY’19) along with its audited Annual Financial Statements.

OUR PERFORMANCE

A. FINANCIAL PERFORMANCE

Assets and Liabilities

Total Assets of the Bank increased YOY by 1.19% to Rs 7.75 lakh crore as at 31st March 2019 from Rs 7.65 lakh crore as at 31st March 2018. During the period, the Net Advances of the Bank increased by 5.65% to Rs 4.58 lakh crore from Rs 4.34 lakh crore. Investment increased by 0.91 % to Rs. 2.01 lakh crore from Rs 2.00 lakh crore as at 31st March 2018.

On the Liabilities side, Global Deposits rose by 5.26 % from Rs.6.42 lakh crore to Rs 6.76 lakh crore during this period. Borrowings declined YOY by 35.3% to Rs 39326 crore from Rs 60851 crore in March 2018.

Net Interest Income

Net Interest Income of your Bank increased YOY by 15% to Rs 17156 crore during FY'19. While Interest Income grew 6.9% YOY to Rs.51310 crore, Interest Expenses growth was contained at 3.3% to Rs.34154 crore.

Operating Profit

Operating Profit of your Bank grew by a robust 26.2% YOY during the FY to Rs 12995 crore. Core Operating Profit excluding gains from treasury operations grew YOY by 69.1% to Rs 11903 crore. Total Income of your Bank increased from Rs.56877 crore in FY’18 to Rs 58688 crore during FY’19. Total Expenses declined from Rs.46582 crore in FY’18 to Rs. 45692 crore in FY’19.

Net Profit/Loss

Bank has narrowed down its net loss to Rs 9975 crore in FY’19 against the loss of Rs.12283 crore during FY’18. Total provision stood at Rs 22971 crore in FY’19 including a provision of Rs. 7167 crore towards the one off incident.

Provisions and Contingencies

During FY’19, your Bank has booked provision (other than tax) of Rs 28,341 crore compared to Rs. 29,869 crore last year. Provision for NPA stood at Rs 24,435 crore in FY’19. Provision Coverage Ratio of the Bank improved to a robust 74.50% as at Mar’19 from 58.42% in Mar’18.

B. OPERATIONAL HIGHLIGHTS

Despite challenging circumstances, the Bank performed creditably and reached several new milestones. Some of the operational highlights of FY ‘19 are listed below:

Financial

- Bank achieved a new landmark with Gross Domestic Business at Rs 11.45 lakh crore in 31.03.2019.

- The Bank has the highest Net Global Business amongst Nationalized Banks as at 31st March 2019.

- CASA Deposits at Rs 2.85 lakh crore remained the highest amongst nationalized banks with 43.51 % share in Domestic Deposits.

- Retail Advances grew by 21.7% during the year with 25.4% growth in Housing Loan Segment.

- All major National Goals under Priority Sector were achieved as at 31.03.2019.

- Cost of Domestic Deposits declined from 5.25% in March 2018 to 5.24% in March 2019.

- Domestic Net Interest Margin increased from 2.42% in FY’18 to 2.59% in FY’19.

Capital

- In order to ensure business growth under capital constraints, churning of the portfolio was undertaken towards better rated borrowers with low risk profile. The strategic approach ensured a strengthened balance sheet with capital conservation.

- To instill a sense of belongingness towards the Bank, the Employee Share Purchase Scheme (ESPS) was implemented which garnered an impressive more than 90% subscription. The capital infusion by the Government under the Recapitalization plan further strengthened the CRAR. The Bank’s CRAR stood at 9.73% as on Mar119 constituting Tier I capital of 7.49% and Tier II capital of 2.24%.

IT and Digital Initiatives

- Your bank believes in leveraging technology for delivering best customer experience. Bank continues to invest in automation of our internal processes to improve efficiency, risk management and reduce cost of operations. Bank has introduced different digital applications in order to facilitate digital transactions such as PNB M-Passbook, BHIM PNB, PNB MobiEase etc.

- Recently Bank has launched “PNB ONE” by unifying all Mobile Apps under one App for providing various banking processes through a single platform. Bank endeavours to enable all the eligible financial transactions and Value Added Services through this App.

- As a result of Bank's efforts towards digitalization, digital transactions have recorded more than 100% YoY growth in FY'19. Bank has achieved about 120% of the annual target set up by Ministry of Electronics and Information Technology(MeitY) in February 2019 itself.

Transformation Exercise

- Under the comprehensive in-house transformation exercise, Mission PARIVARTAN, Bank aims to transform itself into a future ready Bank of the country. In this direction, various initiatives were taken to implement structural changes in the Bank through the three Ps i.e., People, Processes and Products (PPP).

- Centralized Loan Processing Centres (CLPC) were operationalised in line with the Govt, of India's EASE program in order to strengthen the credit processes including credit origination, appraisal, underwriting and processing. These CLPCs are manned with specialist workforce to improve credit quality and Turn Around Time (TAT). CLPCs have also ensured robust internal systems, processes and efficient monitoring through segregation of pre- and post- sanction responsibilities, qualitative credit assessment and efficient monitoring. 18 CLPCs were opened all over India to ensure improved turnaround time and qualitative credit assessment.

- Besides the above, initiatives like revamping of Marketing Structure, digitization of Trade Finance operations, branch rationalization and strengthening inspection & audit system were also undertaken.

C. ASSET QUALITY

Recovery of stressed assets continues to be one of the top priorities for the Bank. As a result of focused efforts in this direction, Gross NPAs of the Bank declined to Rs. 78473 crore as at 31st March 2019 from Rs.86,620 crore in 31st March 2018. Similarly, Net NPAs declined to Rs.30038 crore as on 31st March 2019 from Rs.48,684 crore in Mar’18. In terms of ratios, Gross NPA ratio declined to 15.50% from 18.38% in Mar’18 and Net NPA ratio declined to 6.56% from 11.24% in Mar’18. Provision Coverage Ratio (PCR) improved to 74.50% as on 31st March 2019 from 58.42% in 31st March 2018. Besides, fresh advances have been made in better rated accounts to improve the asset quality.

Initiatives taken to Improve Asset Quality during FY’19

- Stressed Assets Management Vertical (SAMV) was created for enhanced and timely recovery through a dedicated, specialized and motivated team spread all across the country.

- During FY’19, a new scheme was launched, namely “Special Scheme for One Time Settlement for NPA accounts 2018” for accounts with balance outstanding up to Rs. 25 crore empowering various field level functionaries to accelerate recovery in this segment. Under the said scheme, 53,255 OTS proposals were approved.

- A scheme for Recovery in Specifically Identified Accounts, was also launched from 05.12.2018 to 31.03.2019. The accounts identified for the scheme carried 100% provision.

- A specialized online OTS portal was launched for real time monitoring of OTS proposals and Specialized Asset Recovery Management Branches were created as part of the vertical for management of NPA accounts with exposure more than Rs 50 lakh.

- Bank also organized Mega Rin Mukti Shivirs for giving impetus to recovery especially in small advances, to expedite the pace of settlement.

- Concept of “Recovery Champions” was introduced to felicitate the outstanding performers in the field of recoveries in NPA accounts on monthly and yearly basis.

- Bank also took initiative in identifying Wilful Defaulters and notices were issued to various borrowers who were found to have committed an act of Wilful Default. As a result, as on 31.03.2019, 1142 borrowers were declared as Wilful Defaulters.

- Key Responsibility Areas (KRAs) were formalized for staff working in ARMBs, recovery teams at CO/ZO level and in the 50 identified branches having large concentration of NPAs.

- Recovery War room set up last year comprising of 5 senior officers is in operation for constant and vigorous follow up with field staff on daily basis.

- Bank took another constructive initiative "Mission Gandhigiri" to put moral pressure on the defaulters to payout/clear the dues. It included a peaceful dhama before the Borrowers' place.

- Bank has been running successfully e-Auction portal for sale of assets under SARFAESI Provisions. It resulted in quick, hassle free and undisputed realization of sale of securitized asset.

D. INFORMATION TECHNOLOGY AND DIGITALIZATION

In today’s digitalized world with an unprecedented penetration of internet, it is very imperative to be tech savvy. In alignment with Government of India's initiative of a Digital India, Bank has incorporated digitization at all levels and across all customer segments to provide a seamless banking experience. Against a target of 71 crore Digital Transactions for the financial year 2018-19, Bank has achieved 85.4 crores digital transactions (120% of the target) in Feb 2019 itself against the ambitious target set up by MeitY.

Alternative Delivery Channels

a) Internet Banking Services (IBS): As on 31st March 2019, Bank showed a YoY growth of 21% in respect of IBS users. Bank has introduced Overdraft (OD) against Fixed Deposit (FD) through Internet Banking Account.

b) Mobile Banking: As on 31st March 2019, there is a YOY growth of 55% users in mobile banking application of the Bank. With an aim to provide superior customer experience and simplified banking, Bank has recently launched a unified mobile application “PNB One” to facilitate multiple features through single platform. This, all- in- one application, allows users to transfer funds, view account statements, manage debit card & credit card and many other value added services at fingertips.

c) ATMs: In order to cater to the banking needs of customers, Bank has a vast Network of 9255 ATMs across the country and a strong card base of more than 7.42 crore.

Digital Initiatives during FY’19

Bank has been a pioneer in providing 100% CBS solutions in the banking industry across the country. All the bank’s service outlets/centers are working under CBS thereby extending convenient “anywhere anytime banking” to all customers.

Few of the digital initiatives taken during the year are enlisted below:

- Bank has recently launched NCMC Debit Card as per GOI directives which would enable a single interoperable digital payment mode in Metros, Railways and Bus services to fulfill Govt, of India's vision of “One Nation One Card”. Besides, PNB DAV United Co branded Debit Card has also been launched during the year.

- The Bank has revamped the Rakshak plus Debit Card which will be providing additional befifit to Customers who are serving in Indian Army /Navy/Airforce & Indian Costguard.

- Bank last year opened a Digital branch under the brand name of “DigiHut” under the concept “Do it yourself. During FY’19, 4 more DigiHuts were opened.

- The Bank was selected as Digital partner in Kumbh Mela 2019, the biggest religious congregation at Prayagraj, wherein Bank provided services of its patented product, E Rupaya for digital payments, Mobile ATMs and Cash Deposit Machines to the pilgrims.

- The Bank has integrated with NPCI to work as an operating unit under Bharat Bill Payment Operating Unit (BBPOU) and it was made live in September 2017. Now the Bank is working as BBPOU-CU as well as BBPOU-CU on BBPS platform as the Bank started on-boarding of Merchant bill unit.

E. MANAGEMENT INFORMATION SYSTEM

Enterprise-wide Data Warehouse (EDW) has been successfully implemented in the Bank and has evolved into a single source of data catering to numerous requirements related to data/reports of the Bank facilitating meaningful decision making at all levels of the Bank.

Data Analytics: Data Analytics activities have been carried out with an objective of business development and sustainability by taking more accurate and informed decisions based on analytical studies on various topics/ products. Various analytics studies of descriptive and predictive nature were carried out during the year.

F. BRANCH AND OFFICE NETWORK

Domestic Network

The Bank has one of the largest networks of 6989 branches as on 31.03.2019 comprising of 1280 Metropolitan, 1387 Urban, 1727 Semi Urban and 2595 Rural branches. Rural and Semi Urban Branches (RUSU) comprise around 62% of the Total Branch Network.

International Presence

At present, Bank has its overseas presence in 6 countries by way of 2 branches (1 Hong Kong & 1 Dubai), 2 Subsidiaries (London & Bhutan), 1 Associate (at Kazakhstan), 1 Joint Venture (at Nepal).

G. INTERNATIONAL BANKING

At present, the Bank has 145 branches authorised to handle Foreign Exchange Business and 2 Trade Finance Centres at New Delhi & Chennai specialized in centralized handling of trade transactions. The Bank also has Specialized Export Permission (SEPs) branches at major export centres for extending services to the Import/Export customers. Besides, Bank has 21 Exchange Bureaus at important tourist centres to facilitate encashment of Foreign Exchange Currency Notes/Traveller Cheques by foreign tourists/NRIs.

The Bank is having International Service Branch (ISB) at New Delhi for handling Inward Remittances for the Bank as a whole. During FY’19, the Bank has handled remittance business of Rs.46,336 crore. The Bank also has Rupee Drawing Arrangements (RDA) with 32 exchange Houses (24 in the Gulf, 2 in Singapore, 2 in the USA, 1 each in UK, Australia, Canada and Japan) to facilitate remittance from NRIs. Apart from this, the Bank also has remittance arrangements under Money Transfer Service Scheme (MTSS) with 2 Money Transfer Organisations Worldwide.

H. BUSINESS DIVERSIFICATION

- Insurance Business

Life Insurance: The Bank mobilized premium of Rs. 2226 crore from 1,35,957 policies, as against total premium of Rs.1728 crore mobilized during FY’18, thus showing a growth of 28.82 %.

The Bank’s earnings from Life-Insurance business during FY’19 amounted to Rs.178 crore as against Rs.144 crore during FY’18, showing YoY growth of 23.61%.

Total business mobilized under Life Insurance business since inception is Rs.8106 crore, from 8,13,068 policies and total earning amounted to Rs.679 crore.

Non Life Insurance: Under the Non-Life Insurance, the Bank has a tie-up with The Oriental Insurance Company Limited, The New India Assurance Company Limited, Bajaj Allianz General Insurance Company Limited & Religare Health Insurance Company Limited (Stand alone Health Insurance).

The Bank’s Gross written premium stood at Rs. 357 crore from 8.30 lakh policies for FY’19 vis-a-vis Rs.262 crore from 7.12 lakh policies for FY’18. Further, the revenue earned during FY’19 was Rs. 48 crore as against Rs. 36 crore during FY’18, showing a growth of 34%. 2,17,356 health insurance policies were sourced in FY’19 as against 2,12,612 policies sourced in FY’18.

- Mutual Funds: The Bank is distributing and marketing Mutual Fund products of Principal Asset Management Pvt. Ltd, UTI Asset Management Company Ltd, Reliance Nippon Life Asset Management Company Ltd, TATA Asset Management Company Ltd, Aditya Birla Sun Life Asset Management Company Ltd. and LIC Asset Management Company Ltd. During Fy’19, the Bank mobilized a sum of Rs. 3445 crore.

- Depository Services: The Bank was awarded “Top Performer in New Account opened” under Bank category from NSDL as Depository Participant. As a Depository Participant, bank opened 47582 Demat accounts in FY’19.

- Merchant Banking: During FY’19, Bank handled more than 1,76,974 ASBA applications against 139 issues.

- Credit Card: Bank is holding a leading position in the banking Industry with a customer base of 3.34 lakh in credit cards as on 31.03.2019. To enhance the security level of the credit cards, the Bank is issuing only EMV Chip cards with PIN. Issuance activity became an independent profit centre. Profit from credit card issuance business increased from Rs.25 crore as at 31.03.2018 to Rs. 47 crore as on 31.03.2019.

During FY’19, the Bank implemented Long Code Pull SMS facility for customer convenience. The Bank also introduced Instant Issuance Credit Card & Debit Card kiosks at Digi-hut branches for instant issuance of cards to walk-in customers.

- Merchant Acquiring Business: The Bank is undertaking merchant acquiring business through various platforms including Point of Sale (POS), Quick Response Code (BHIM/Bharat QR Code), BHIM Aadhar Pay and Internet Payment Gateway. Punjab Govt. Food Procurement business through PUNGRAIN was also undertaken successfully.

A total of 47,463 merchants on various platforms were on-boarded through POS, QR & BHIM Aadhaar.

New Initiatives during FY’19

- Lead Tracking System (LTS) was implemented for generation of merchant leads from fields on various platforms and facilitating centralized reporting reducing turn around time TAT.

- De-installation and re-mapping of accounts for merchants were facilitated through LTS.

- Personal Executive (PE) Model was introduced to maintain long term relationship with High Networth Individuals (HNIs),

- A new version of “Performance Mirror'1 portal for tracking progress of PEs mapped was brought into effect.

- IT integration with PNB Metlife India Ltd. for online payment through “PAYPREM” was made live.

I. GOVERNMENT BUSINESS

In order to focus on Govt, business, various new initiatives were implemented in the Bank. The Bank has been increasing tie-ups with various State Governments for capturing their transactions through e-GRAS (Government Receipts Accounting System) which facilitates the Taxpayers to make payments due to the Government such as Sales tax, Road tax, Taxes and Duties including penalties. This was enabled in the States/UT of Chandigarh, Rajasthan, and Jharkhand etc. Bank has also successfully integrated with National Health Authority for PMJAY (Prime Minister Jan Aroyogya Yojna) Scheme. The Bank was one of the two public sector banks integrating with them.

Bank launched a tax collection campaign and tied up with GeM(Govemment Market Place) for integration with the Bank’s systems for seamless e-procurement by Government departments. During FY’19, the Bank launched PPF campaign during the months of Dec 2018 to March 2019 and more than 1.20 lakh new PPF accounts were opened during the campaign.

Apart from the above, the Bank signed MoU with India Post Payments Bank(IPPB) for technical support and offering retail loan products at very attractive rates to Dak Sewaks. The Bank digitized the Prayagraj Kumbh Mela 2019 through PNB e-Rupaya card for which PNB was accorded the status of Digital Partner for the entire event lasting for two months where approximately 2.5 crore pilgrims visited.

Some of the initiatives taken up by the Bank under Govt. Business during the year are given as under:

1. Defence Bank Cell (DBC) at HO and Veteran Facilitation Centres created at various places Pan India as part of the strategy to garner defence accounts (salary and pension) and to facilitate Veterans by attending to their queries for on the spot resolution.

2. A CPPC (Central Pension Processing Centre) set up within PCDA (P) Allahabad for handling all new defence pension accounts. This is an effective marketing tool without incurring additional cost and will boost Defence business.

3. Systems have been customized for sending SMS alert for submission of Life Certificate, credit of pension with details, automatic release of additional old age pension and restoration of commutation.

4. Customized pension processing through CBS has been enabled for smooth, accurate and timely processing.

5. The Rakshak Scheme has been revamped as the Rakshak Plus Scheme with several enhanced facilities for Defence and Para Military Forces including increased Personal Accident Insurance and Air Accident Insurance. Presentations are being given at various Military Establishments to disseminate the information regarding this scheme so that maximum defence personnel can avail of it.

6. A MoU was signed with Everest Bank Limited (EBL) Nepal, to extend special banking facilities to Nepal Domiciled Gorkha soldiers of Indian Army (serving and pensioners) having Rakshak Plus accounts.

7. Presentations are being given at Army and Air Force establishments to prospective defence veterans with regard to the avenues/ financial products available to them for investing their funds.

8. Payments to the beneficiaries have been facilitated under Pradhan Mantri Kisan Nidhi Yojna through system integration.

9. System integrated for online process for Sukanya Samridhi Accounts, PPF accounts.

10. Bank has also become POP (Point of Presence) for online opening of accounts under NPS (National Pension Scheme).

J. TREASURY OPERATIONS

Gross Investment of the Bank as on 31 st March 2019 stood at Rs 2.01 lakh crore increasing from Rs 2.00 lakh crore as on 31st March 2018. The Interest income from investment portfolio increased to Rs.13,941 crore as in FY’19 from Rs 13,806 crore in FY’18.

The Bank actively traded in sovereign bonds, Non-SLR bonds and equity throughout the financial year. The liquidity position of the Bank was comfortable during first H1 FY’19. However, during second half of FY’19, system liquidity remained neutral to negative. The Bank managed the funds through CBLO, Repo, CD etc. and complied with all the requirements of CRR/SLR stipulated by the Regulator. Total Trading profit (including derivative) stood at Rs1093 crore in FY’19.

Fixed Income (SLR/NSLR)

During FY’19, the Bank booked trading profit of Rs.747 crore from sale of investments in fixed income against Rs.1455 crore during FY’18.

FY’19 started on a positive note witnessed by softening of yields which touched the year’s low. However, risks arising due to the impact of Minimum Support Price (MSP) and other factors on inflation along with higher crude oil prices weighed on the bond market. Continuous rise in crude oil prices and rupee touching an all time high dampened the market sentiments in the first half of the financial year. Additionally, US yields surged to a level unseen in the past several years, which weighed on the bond market and caused yields on the domestic bonds to harden further.

Equity

The Bank booked Gross Profit of Rs193 crore in FY’19. The profit included profit of Rs107 crore arising from stake sale in ICRA. The dividend income for FY19 stood at Rs 149 crore.

Forex

Rupee had started its journey from Rs.65 per Dollar on April 2018 and touched an all time high of Rs.74.48 during the month of October 2018 due to high international Oil prices. There was wide fluctuations due to global factors requiring RBI intervention. Net Forex income has increased from Rs.1790 crore in FY’18 to Rs.1881 crore in FY’19 on account of better utilization of foreign currency resources in hand.

K. CUSTOMER CARE

The Bank fully realizes the importance of customer service and continues to lay utmost priority to rendering prompt and efficient service to customers. In order to achieve the desired objective, the Bank has formulated a robust Grievance Redressal Policy.

Initiatives undertaken during the year for improvement in customer service:

- The Bank has an On-line Grievance Redressal Management Portal called Centralized Grievance Redressal Management System (CGRMS). Customers can lodge their requests/complaints in the CGRMS through Bank's website, Internet Banking Service, Mobile Banking Service and Mobile App. Complaints are also received at Head Office, all the Circle Offices and over 1,856 SAP-CRM enabled branches. These are entered in CGRMS. Through this system, the customer gets an immediate automatic acknowledgement and can keep a track of the complaint also.

- The Bank has state-of-the-art Contact Centers at Gurgaon and NOIDAto provide tele-banking services to its customers on 24 x 7 x 365 basis through two leading Service Providers. In addition to these two Primary Sites, the Bank has also established two Secondary Contact Centers at Hyderabad and Bhopal to provide tele-banking services to its customers in 11 languages. The number of services extended by Contact Centre through Tele Banking increased from 6 to 25 during FY’19 thereby making them more customers friendly.

- The Bank has constituted teams of officials at Customer Care Centre at Head Office, Circle Offices and Zonal Offices to pay incognito visit to branches to assess standard of service. During FY'19, officials of the Bank made 7575 incognito visits to branches pan India and deficiencies pointed out were taken up for taking corrective steps to improve customer service.

- The status of complaints received by the Bank is reviewed by “Customer Service Committee of the Board” a Sub-Committee of the Board, on quarterly basis. The meetings of the Sub-Committee are presided over by the Managing Director and CEO.

- The Bank has a “Standing Committee on Customer Service”, which also reviews customer service of the bank as well as implementation of the Code of Bank’s Commitments to Customers of Banking Codes and Standards Board of India (BCSBI).

- The Bank has in place an Internal Ombudsman as per the recommendations of the Damodaran Committee. The system ensures greater transparency in the redressal of grievances by the Bank.

- Customer Service Committees in all the branches and Circle Offices look into the quality of customer service rendered and critically examine the feedback/ suggestions for improvement in customer service. These committees meet once in a month where staff and the invited customers interact freely on service related issues.

- Theme Based Meetings are conducted at monthly intervals in all branches on a pre-decided date and theme to improve awareness among field staff about bank’s products and services and to sensitize them about the issues of maximum importance.

Out of a total number of 64,401 complaints (i.e.1862 complaints outstanding as on 01.04.2018 and 62,539 complaints received during FY’19), 63,435 complaints were resolved up to the satisfaction of the complainant, till 31st March, 2019.

L. IMPLEMENTATION OF OFFICIAL LANGUAGE

Your Bank accomplished various parameters fixed by the Govt, of India, Ministry of Home Affairs, Deptt. of Official Language for FY’19. The Bank is using ‘Unicode’ fonts for Hindi correspondence etc. at all levels.

During FY’19, the Bank was awarded several prizes for its excellent performance in the use of Hindi which included the prestigious First prize namely ‘Rajbhasha Kirti Shield’ the top most prize scheme of Government of India. The Bank was awarded 12 prizes in the field of Rajbhasha during FY’19 from Government of India, Ministry of Home Affairs and Rajbhasha Vibhag, which is a record of sorts.

In addition to this, Town Official Language Implementation Committees situated in different locations of the country and other Non-Government Organizations also awarded 106 prizes in region ‘A’, 24 prizes in region ‘B’ and total 13 prizes in region ‘C’ to our bank. Our staff members have also received 120 prizes on Individual basis. During the FY’19, the third sub-committee of Parliament on Official Language visited our Branch Office- Srinagar (Garhwal), Circle Office-Surat, and Circle Office-lndore. Drafting and Evidence Sub-Committee of the Committee of Parliament on Official Language inspected the Zonal Office-Delhi, Circle office-Mumbai and Branch Office-Palwal.

During the FY’19 also, the Bank celebrated ‘Hindi Month’ during Sept. 2018 and also organized ‘Hindi Diwas’ on 14th Sept. 2018. Several programmes/competitions were organized and awards & prizes were given during the month.

M. PNB SUBSIDIARIES AND REGIONAL RURAL BANKS

DOMESTIC

i) PNB Gilts Limited: Debt market started the year on a bearish note on the back of inflation concerns, elevated crude prices and absence of demand for government securities by investors. This was further accentuated by repo rate changes by RBI.

Despite the heightened volatility, Company managed to post a Profit before Tax of Rs. 83 crore in FY’19. Additionally, Company fulfilled all its obligations as a Primary Dealer in both primary and secondary market. With regard to Treasury Bills commitment, the Company exceeded the stipulated success ratio of 40%, achieving 41.16% and 40.40% in H1 and H2 respectively. In G-sec category, Company fulfilled the underwriting commitments, thereby supporting the government borrowing program. The Company’s total turnover ratio (secondary market) stands at 179 times for treasury bills and 303 times for government-dated securities as on March 31, 2019 against the minimum RBI stipulation of 10 times and 5 times respectively.

ii) PNB Investment Services Limited: The Company is a profit making company from the first year of its operations. During the year ended March 2019, the Company earned fee based income of Rs. 5.80 crore with a total income of Rs.8.70 crore as against a fee of Rs. 6.00 crore and total income of Rs. 9.20 crore respectively for the year ending March 2018. Profit before Tax, during the period ending March 2019 was Rs. 2.41 crore as against Rs. 3.90 crore for the period ending March 2018.

Post withdrawal of RBI Guidelines on Stressed Assets w.e.f., 12th February 2018, there was a significant decline in debt restructuring assignments for the entire FY’19 thereby impacting the overall revenue. The Company took initiative to develop and strengthen the debt syndication business in the period under consideration. During FY’19, PNBISL was involved in successfully executing four non core asset disinvestment mandates on behalf of PNB. The trusteeship business of the company recorded steady growth in number of clients in FY’19.

INTERNATIONAL

iii) PNB International Limited (PNBIL): PNBIL is focusing on diversifying the loan book through syndicated loan and financial institution business apart from providing new products and services to the community with emphasis on non-lending revenue from remittance business. It is also strengthening its technology platform to offer Mobile Banking and online remittance facilities to the customers in UK. Having reduced the legacy portfolio and having prudent risk management in place, PNBIL has also strengthened the governance practices in the Bank.

PNBIL is having customer deposit of $723mn and advances of $917mn. The Operating Profit before provision, tax and dividends for FY’19 stood at $16.43 mn, which is higher from $11.93 mn in FY’18. Total income for FY’19 stood at $47.02 mn and Net interest Income was at $33.53 mn.Net trading income stood at $1.3 mn for FY’19. Net profit (before tax) for FY’19 was $7.37mn against $5.89 mn of FY’18.

With Brexit impacting the UK economy, businesses and investors are adopting a cautious approach resulting in subdued demand in general, thereby impacting overall credit demand.

iv) Druk PNB Bank Limited: Total business of the Bank as on 31.3.2019 increased to Rs. 2141 crore from Rs.1726 crore as on 31.3.2018, showing a YOY growth of 24.04%. The network of the subsidiary comprises of 7 branches and 22 ATMs. On the profitability front, the subsidiary showed good earnings, and the profit of the Bank has increased from Rs.19 crore during FY’18 to Rs. 28 crore during FY’19, registering a growth of 45% on YoY basis. During FY’19, the Bank successfully increased its paid up capital from Rs.45 crore to Rs.70 crore through rights issue. The Bank also migrated to FinaclelOx and integrated its Swift operations with Core Banking Solution (CBS).

v) REGIONAL RURAL BANKS (RRBs)

At present, five RRBs are sponsored by the Bank which are operating in five States, namely, Bihar, Haryana, Himachal Pradesh, Punjab and Uttar Pradesh covering 93 districts with a network of 2937 branches.

Total Business of PNB sponsored RRBs as on 31.03.2019 stood at Rs.91293 crore. Total Deposits of RRBs were Rs.56546 crore and advances were Rs. 34747 crore as on 31.03.2019. All PNB Sponsored RRBs remained in Profit and combined Net Profit of RRBs during the period ended Mar'19 stood at Rs. 185.96 crore. RRBs have cumulatively opened 58,81,415 accounts under Pradhan Mantri Jan Dhan Yojana (PMJDY) as on 31.03.19. RuPay ATM cards were issued to 37,18,902 account holders.

Financial Performance of RRBs as on 31.03.2019 (Un-audited)

(Amt. in Rs. Crore)

SI.

Performance of RRBs

31st Mar’18 (Audited)

31st Mar119 (Un-Audited)

YoY

Growth

%

1

Aggregate Deposits

51843

56546

9.07

2

Aggregate Advances

31250

34746

11.19

3

Aggregate Net Profit

246

186

-24.32

4

Branches under CBS

100%

100%

5

Profit Per Employee (Rs lakh)

2.08

1.52

-26.90

6

No. of Loss Making Branches (being 12 month old or more)

160

72

N. AWARDS AND ACCOLADES

Despite being a challenging year, your Bank has been able to perform well and engineer turnaround in the shortest possible time. The Bank also continued to restructure its business model to remain competitive and profitable in the times to come. All these efforts of the Bank were recognized at various platforms and also brought the Bank many laurels.

PNB was adjudged overall “Best Performing Bank” among all Public Sector Banks under EASE (Enhanced Access & Service Excellence), an agenda of reforms launched by DFS, Govt, of India. In addition, the Bank received recognition in four out of the six key themes envisioned under EASE i.e., Customer Responsiveness (Winner), Responsible Banking (Winner), Credit Off-take (Winner) and Deepening Financial Inclusion & Digitalization (Runner Up) based on an independent assessment by Boston Consultancy Group.

In addition to the above, the Bank has been recognized as “Best in Financial Inclusion” by Business Today and KPMG. Further, the UIDAI, Govt, of India has also acknowledged our efforts by awarding “Aadhar Excellence Award” as the 2nd Best Performing Public Sector Bank in terms of Aadhar Generation and Update. The Bank has also been bestowed with the “IBA Banking Technology Award 2019” for “Most Customer Centric Initiatives Using Technology (Runner Up) among large Banks". In appreciation of efforts, NSDL, Delhi adjudged the Bank as “Best Performer in Account Growth Rate (Top Depository Participant)”and “Top Performer in New Accounts opened (Bank Category)". Top Rankers Management Club conferred “Top Rankers Excellence Award for Entrepreneurial Path Breaker” to the Bank.

Recently, Bank was also recognized as “Best Bank For Corporate Social Responsibility” and bestowed with Asiamoney Banking Awards 2019.

In the Forbes survey for assessing “The World's Best Banks 2019” in terms of customer satisfaction ratings, PNB was ranked 2nd among all Public Sector Banks & 7th among 30 Banks (including Private and Foreign Banks) in India. The survey was carried in partnership with market research firm Statista by surveying more than 40,000 customers across 23 countries around the globe. Customers were asked to rate banks on overall recommendation and satisfaction, as well as 5 key attributes or ‘sub-dimensions’ of 1) trust, 2) terms and conditions 3) customer service 4) digital service and 5) financial advice.

O. FUTURE BUSINESS PLAN OF THE BANK

Bank’s performance in FY’19 despite the challenges is a testimony to our continued resilience. Going ahead, this gives us the confidence that Bank will carry forward the performance momentum. Bank will continue its focus on best customer service, improvement in quality of assets, building a strong IT platform, rationalizing costs and expanding its dimensions. We will realign our business model to capture opportunities, strengthen balance sheet, increase revenue pool, further our digital agenda by launching new innovative products to press ahead with customer journeys and become more data-driven. These initiatives will enable us to forge ahead in our quest to re-imagine banking, register higher business growth and achieve efficiency and profitability.

The Bank has always perceived employees as its most valuable assets. In order to develop human capital, key focus areas include succession planning, developing a talent pool for critical positions, leadership development besides continuously recruiting and training staff to augment skill set. We value the diversity in our team and strongly believe in reverse mentoring as younger employees come with diverse learnings & skills and their presence adds pace, fresh perspectives and new ideas to address changes and challenges.

We shall continue to make important progress in transforming the bank through the transformation exercise, Mission Parivartan. Bank has a portal, Lead the PARIVARTAN that encourages employees to pitch in ideas for improving performance. Bank ensures that the workable ideas are translated into action and execution. Several new ideas have been implemented and going forward we intend to continue with the drive.

We have the strength of numbers with the largest branch network, a loyal customer base of over 11 lakh, 70000 dedicated employees determined to carry forward the success story of our decades of service to the nation and customers. Our vision in the next phase of growth is to make this strength of numbers count more and more through quick response and innovation to deliver simple, fast and contextual banking in the digital age. As we step into 125th year of service, we remain committed to strengthening the legacy of PNB by staying true to our core values and key tenets upon which our Bank is founded, enhancing our role and commitment towards People and Nation building.

P. BOARD OF DIRECTORS

Board of the Bank compromises of 9 Directors including 3 whole time Directors i.e. One Managing Director & CEO and two Executive Directors as on 31.03.2019. During FY'19, the following changes took place in the composition of Board of Directors:

- Ms. Hiroo Mirchandani, Director under Shareholder category completed her tenure on 01.05.2018.

- Dr. Asha Bhandarker has been elected as Shareholder Director on the Board of the Bank for a period of three years w.e.f., 12.09.2018.

- Shri Sudhir Nayar, Director under Shareholder category completed his tenure on 18.12.2018.

- As per DFS notification F. No. 16/13/2018-B0.l dated 18.01.2019, Shri K. V. Brahmaji Rao cease to be the Executive Director of PNB w.e.f. 18.01.2019.

- As per DFS notification F. No. 16/13/2018-B0.l dated 18.01.2019, Shri Sanjiv Sharan cease to be the Executive Director of PNB w.e.f. 18.01.2019

- Shri Agyey Kumar Azad was appointed as Executive Director on Board of the Bank w.e.f., 22.01.2019.

The Board wishes to place on record its appreciation for the valuable contribution made by Ms. Hiroo Mirchandani and Shri Sudhir Nayar.

Q. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors confirm that in the preparation of the annual accounts for the year ended 31st March’19:

- The applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

- The accounting policies, framed in accordance with the guidelines of the Reserve Bank of India, were consistently applied;

- Reasonable and prudent judgment and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for the year ended 31st March’19;

- Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India, and;

- The accounts have been prepared based on the principle of “going concern”.

R. ACKNOWLEDGEMENT

The Board expresses its thanks to the Government of India, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges, Bank’s customers, Public and the Shareholders for valuable support, continued patronage and confidence reposed in the Bank.

The Board wishes to place on record its appreciation for the valuable contribution made by the Bank’s staff at all levels and looks forward to their continued involvement in achieving the future goals.

For and on behalf of Board of Directors

Sunil Mehta

Managing Director & CEO