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Company Information

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30 November 2021 | 12:09

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ISIN No INE160A01022 52Week High 48 Book Value (Rs.) 79.13 Face Value 2.00
Bookclosure 26/07/2021 52Week Low 31 EPS 2.33 P/E 16.27
Market Cap. 41676.69 Cr. P/BV 0.48 Div Yield (%) 0.00 Market Lot 1.00
Security Type Other


You can view the entire text of Notes to accounts of the company for the latest year
Year End :2021-03 

RBI vide circular no. DBR.No.BP.BC.83/21.06.201/2015-16 dated 1st March, 2016 has given discretion to banks to consider Revaluation Reserve, Foreign Currency Translation Reserve and Deferred Tax Asset for purpose of computation of Capital Adequacy as CET-1 capital ratio. The Bank has exercised the option in the above computation.

Amalgamation adjustment reserve arised on account of Amalgamation has been considered under CET-1 for the purpose of calculation of CRAR.

** a) 2673063327 Equity shares of Rs. 2.00 each issued to shareholders of erstwhile Oriental Bank of Commerce and erstwhile United Bank of India in lieu shares held by them in erstwhile banks.

b) by way of QIP.

During the FY 2020-21 the Bank has issued 1,06,70,52,910 equity shares having Face Value of Rs.2 each for cash to Qualified Eligible Buyers pursuant to Qualified Institutional Placement (QIP) in accordance with the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 at a premium of Rs.33.50 per share aggregating Rs. 3,788.04 Crore. This has resulted in an increase of Rs.213.41 Crore in the issued and paid up Equity Share Capital and Rs. 3,563.91 Crore (Net of Issue Expenses) in Share Premium Account.

During the year, Bank has issued Basel III compliant Additional

Tier-I Bonds of Rs.495.00Crore through private placements.

Further, the Bank has also raised Basel III compliant Tier II

Bonds of Rs. 3,994 Crore during FY 2020-21 through private


Note on Amalgamation

Amalgamation of Erstwhile Oriental Bank of Commerce and

Erstwhile United Bank of India with Punjab National Bank

a. In exercise of power conferred by section 9 of the Banking Companies (Acquisition and Transfer of Undertakings Act, 1970 (5 of 1970) and section 9 of the Banking Companies (Acquisition and Transfer of Undertakings Act, 1980 (40 of 1980), after consultation with the Reserve Bank of India), the Government of India (Gol), Ministry of Finance, Department of Financial Services issued Gazette Notification no. CG-DL-E- 04032020-216535 dated March 04, 2020, approving the scheme of Amalgamation of erstwhile Oriental Bank of Commerce and erstwhile United Bank of India (collectively referred to as Transferor Banks) into Punjab National Bank (hereinafter referred to as Transferee Bank) on March 04, 2020. This scheme came into force on the April 01,2020.

On the commencement of this scheme, the undertakings of the Transferor Banks stand transferred to the Transferee Bank. Undertakings of the transferor banks are deemed to include all business, assets (including tangible and intangible, movable and immovable), liabilities, reserves & surplus and all other rights and interests arising out of such property of the Transferor Banks in relation to the undertakings as were immediately before the commencement of scheme, in the ownership, possession, power or control of the Transferor Banks within or outside India.

b. After taking into consideration the recommendation of the respective Audit Committees, Joint Valuation Report and the fairness opinion issued to the respective banks, the Boards of the respective banks had approved the Share Exchange Ratio (ranking pari passu in all respects and shall have the same rights attached to them as the then existing equity shares of the Transferee Bank, including, in respect of dividends, if any, that declared by the Transferee Bank, on or after the commencement of this scheme) as under:-

i. 1150 equity shares of Rs. 2 each of Punjab National Bank for every

1000 equity shares of Rs. 10 each of Oriental Bank of Commerce.

ii. 121 equity shares of Rs 2 each of Punjab National Bank for every

1000 equity shares of Rs.10 each of United Bank of India.

c. In respect of entitlements to fraction of equity shares, the consideration has been paid in cash.

d. Disclosure as per para 24 of AS 14 - “Accounting for Amalgamations” is as under:

i. The general nature of business of the amalgamating companies i.e. e-OBC and e-UNI is same as that of the business of Punjab National bank i.e Banking;

ii. Effective date of amalgamation for accounting purposes is 01-04-2020

iii. The method of accounting used to reflect the amalgamation:

The amalgamation has been accounted under the “pooling of interest” method of AS-14 issued by the Institute of Chartered Accountants of India on “Accounting for Amalgamations”, and as per the approved Scheme of Amalgamation to record amalgamation of erstwhile Oriental Bank of Commerce and erstwhile United Bank of India with the Bank w.e.f. April 01, 2020.

All assets and liabilities (including contingent liabilities), duties and obligations of transferor Bank have been be recorded in the books of account of Transferee bank at their existing carrying amounts and in the same form as on April 01, 2020, except for adjustments to bring uniformity of accounting policies as required under AS-14.

Accordingly, the difference of Rs.9,268.29 Crore (net-off adjustments) between the net assets of amalgamating banks and the amount of shares issued to shareholders of the amalgamating banks has been recognized as Amalgamation Adjustment Reserve.

Standalone Financial Statement for the year ended 31 March 2021 includes operations of erstwhile Oriental Bank of Commerce and erstwhile United Bank of India which are amalgamated with the Bank w.e.f. 1 April 2020 and hence the figures for year ended 31 March 2021 are not comparable with corresponding year ended 31 March 2020.

‘Others include Special Govt. Securities of ?57769.30Crore (Previous year: ?36931.00Crore) (Net of depreciation, if any) shown under Govt. Securities in Schedule 8. Amounts reported under columns 4, 5, 6 and 7 above may not be mutually exclusive. Others also includes US Treasury, US Securities/Bonds HKMA and China Govt. Bond.

Sale and transfers to / from HTM category

The total value of sales and transfers of securities to / from HTM category during 1st April 2020 to 31st March 2021 has not exceeded 5% of the book value of investments held in HTM category as on 31.03.2020 (Excluding following Transactions).

[The 5 percent threshold referred to above will exclude (a) the one- time transfer of securities to/ from HTM category with the approval of Board of Directors permitted to be undertaken by banks at the beginning quarter of the accounting year (b) sales to the Reserve Bank of India under pre-announced OMO auctions, (c) Repurchase of Government Securities by Government of India from banks, (d) Sale of securities or transfer to AFS / HFT consequent to the reduction of ceiling on SLR securities under HTM in addition to the shifting permitted at the beginning quarter of the accounting year].

As such no disclosure is to be made in terms of extant RBI guidelines.

@All these swap deals are Treading swap and the fair value is its mark to market value.

“The above Trades are Interest Rate Swap Deal done with Interbank for '75.00Crores (Previous year: '75.00Crores) and with Financial Institution 'NIL (Previous year: 'NIL).

Credit Risk (Credit Exposure) for Current Year '1.32Crores (Previous year '1.52Crores).

There are total 3 deals out of which No deal is Back to Back Deal, 2 Deals where payment is made at Fixed Contract Rate and received at Floating rate and in remaining 1 deal, payment is made at Floating Rate and received at Fixed Contract Rate”.

Qualitative Disclosures

The Bank uses derivatives products for hedging its own balance sheet items as well as for trading purposes. The risk management of derivative operation is headed by a senior executive, who reports to top management, independent of the line functions. Trading positions are marked to market on daily basis.

The derivative policy is framed by Integrated Risk Management Division, which includes measurement of credit risk and market risk.

The hedge transactions are undertaken for balance sheet management. Proper system for reporting and monitoring of risks are in place. Policy for hedging and processes for monitoring the same is in place.

Accounting policy for recording hedge and non-hedge transactions are in place, which includes recognition of income, premiums and discounts.

Valuation of outstanding contracts, provisioning, collateral and credit risk mitigation are being done.

1. Banks adopt the Current Exposure Method on Measurement of Credit Exposure of Derivative Products as per RBI instructions.

(vi) As per RBI Circular No.DBR.BPBC No.32/21.04.018/ 2018-19 dated April 1, 2019, in case the additional provisioning for NPA assessed by RBI exceeds 10% of the reported profit before provisions and contingencies for the reference period and /or additional gross NPAs identified by RBI exceeds 15% of the published incremental Gross NPAs for the reference period, then the banks are required to disclose divergence from prudential norms on income recognition, assets classification and provisioning.

Divergences in terms of above circular, are within threshold limits as specified above, hence no disclosure is required with respect to RBI's annual supervisory process for FY 2020.

Details of Financial Assets sold to Securitisation / Reconstruction Company (SC/RC)/NBFC for Asset Reconstruction.

As per RBI Circular No. DBR.No.BP.BC.18/21.04.048/ 2018-19 dated 1st January 2019, DOR.No.BP.BC.34/ 21.04.048/2019-20 dated 11th February 2020 and DOR. No.BP.BC.44/21.04.048/2020-21 dated 06th August 2020 on restructuring of Advances-MSME sector, the details of restructured accounts as on 31.03.2021 are

COVID - 19 pandemic continues to spread across several countries including India resulting in a significant volatility in Global as well as Indian financial markets and a significant decline in global and local economic activities. The Govt. of India announced a series of lock down measures from March 2020 onwards. Such lockdowns were lifted and reimposed for activities by various governments at various points of time depending on the situation prevailing in their respective jurisdictions. The current second wave of COVID 19 pandemic, wherever the number of new cases have increased significantly in India, has resulted in reimposition of localized/regional lockdown measures in various parts of the country.

The situation continues to be uncertain and the Bank is evaluating the situation on ongoing basis. The extent to which the Covid-19 pandemic will impact the Bank's results will depend on future developments, which are highly uncertain including among other things, the success of vaccination drive. The major identified challenges for the Bank would arise from eroding cash flows and extended working capital cycles. The Bank is gearing itself on all the fronts to meet these challenges.

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.2,139.28 Crore as on March 31, 2021 in 15 accounts as detailed below:

I In accordance with the RBI guidelines relating to COVID-19 Regulatory Package dated March 27, 2020, April 17, 2020 and May 23, 2020 and clarification dated May 06, 2020 issued by RBI through Indian Bankers Association, the Bank granted moratorium on the payment of instalments and/or interest, as applicable, falling due between March 01, 2020 and August 31, 2020 to eligible borrowers classified as Standard, even if overdue, as on February 29, 2020. The moratorium peiod, wherever granted, shall be excluded from the number of days past due for the purpose of asset classification under RBI's Income Recognition and Asset Classification norms.

Disclosure in terms of RBI circular RBI/2019-20/220 DOR. No.BP.BC.63/21.04.048/2020-21 dated April 17, 2020, COVID-19 regulatory Package-- Asset Classification and Provisioning 31st March 2021:

In accordance with the instructions of RBI circular dated 07.04.2021 on “Asset Classification and Income Recognition following the expiry of Covid 19 regulatory package”, the Bank shall refund/adjust ‘interest on interest' charged to all borrowers including those who had availed of working capital facilities during moratorium period i.e.01.03.2020 to 31.08.2020, irrespective of whether moratorium had been fully or partially availed or not availed. Pursuant to these instructions, the methodology for calculation of the amount to refunded/adjusted for different facilities shall be finalized by the Indian Bank Association (IBA) in consultation with other industry participants/bodies, which shall be adopted by all the lending institutions. Accordingly, IBA vide its letter dated 19.04.2021 has informed methodology finalised for refund/ adjustment as per Supreme Court judgement.

Accordingly, the Bank has created an estimated liability of Rs.328.00 Crore towards the same and has reduced the same from interest income for the year ended March 31, 2021.

In the order dated September 03, 2020, Hon'ble Supreme Court of India in writ petition Gajendra Sharma vs. Union of India & Others, has directed that accounts which were not declared as NPA till August 31,2020 shall not be declared

as NPA till further orders. Based on the same, the Bank has not classified any account as NPA which was not NPA as on August 31,2020. As a matter of prudence, the Bank made a contingent provision of Rs. 2,519.99 Crore (including Rs. 430.63 crore for derecognised interest) till

31.12.2020. The above order of the Hon'ble Supreme Court of India stood vacated pursuant to order dated


In view of the above, as per the instructions of RBI Circular dated 07.04.2021, the Bank has classified these borrower accounts as per extant IRAC norms as on March 31,2021 and reversed the above additional provisions.

p) 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.8,374.53 Crore (Aggregate provision of RBI List 1 and List 2 accounts) as on March 31,2021 (100% of Gross NPA advances). (Previous Year Rs.9474.27 Crore; 98.51% of Gross outstanding).

q) As per RBI notification RBI/2021-22/28 DOR.STR. REC.10/21.04.048/2021-22 dated May 5, 2021, Banks are advised that they are permitted to utilize 100 percent of floating provision/countercyclical provisioning buffer held by them as on December 31, 2020 for making specific provisions for non-performing assets with the prior approval of their respective Boards. The Bank has obtained requisite prior approval from its Board of Directors and has utilized floating provision amounting to Rs.384.37 Crore against the requirement for specific provision for non-performing assets in the year ended March 31,2021.

Risk Category wise Country Exposure

Total Net Funded Exposure as on 31.03.2021 is '66771.96 Crores. Total assets of the Bank (PNB 2.0) as on 31.12.2020 were '1254934.00 Crores, 1% of total asset '12549.34 Crore. Bank did not exceed the exposure in any country beyond '12549.34 Crores i.e. 1% of Total Assets of the Bank as on 31.12.2020. Hence, no provision is required with respect to country risk exposure as on 31.03.2021.

Bank's Disclosure in respect of Credit Exposures where the same had exceeded the Prudential Exposure limits as per Large Exposure (LE) framework prescribed by RBI for Individual/Group Borrowers for the financial year ended


Details of accounts where Bank has exceeded prudential exposure ceilings as per Large Exposure (LE) framework in respect of any Individual and Group Accounts based on Tier - 1 Capital of '55507 Crores for the financial year ended 31.03.2021 are as below:-

*RBI Circular dated 03.06.2019 has given leverage of 5% over and above the ceiling of 20% of single counterparty under the Bank's Board Power. The same was ratified by the Board in its meeting dated 05.03.2021 vide Agenda No. A-3.

**As per L & A Circular no. 106/2020 dated 04.06.2020 has allowed increase in Bank's Exposure to a Group of Connected Counterparties from 25% to 30% of the eligible capital base of the bank valid upto 30.06.2021.

All the exposure (other than exempted exposure) of Individual and Group Accounts (Except as mention above) for the financial year ended 31.03.2021 are within the prescribed regulatory limits, as per LE Framework.

Disclosure of Bouncing of SGL:

Particulars of Bouncing of SGL securities during the period 01.04.2020 to 31.03.2021 is NIL (Previous year: NIL)

Other Disclosures required by Accounting Standards

Accounting Standard - 5 Net Profit or Loss for the period, Prior Period items and Change in Accounting Policy

The financial results for the year ended March 31, 2021 have been prepared following the Accounting Policies and practices as those followed in the annual financial statements for the year ended March 31, 2020, except appropriation of recoveries in NPA accounts.

After March 31,2020, the Bank has changed its accounting policy for appropriation of recovery in NPA accounts from the earlier policy of appropriating recovery first against charges recorded then principal advance amount and balance towards recorded/derecognized income, to the new policy of appropriation of recovery first against the charges recorded, followed by recorded interest/derecognized interest and balance against the principal. This change in accounting policy has resulted in increase in profit before tax by Rs.611.97Crore for year ended March 31,2021.

Accounting Standard - 9 Revenue Recognition:

Certain items of income are recognized on realization basis as per Accounting Policy No. 3.5. However, the said income is not considered to be material.

Accounting Standard - 10 Properties, Plant and Equipment.

“The Bank has Defined Contribution Plan applicable to all categories of employees joining the Bank on or after 01.04.2010. The scheme is managed by NPS trust under the aegis of the Pension Fund Regulatory and Development Authority (PFRDA). National Securities Depository Limited has been appointed as the Central Record Keeping Agency for the NPS.

The details of contribution is as under:-

During the financial year ended March 31,2021 = ?747.67 Crores [Bank Employee contribution] (Previous year: ?391.68 Crores (Bank Employee contribution))

16. Accounting Standard - 17 Segment Reporting

Segment Identification

I. Primary (Business Segment):

The following are the primary segments of the Bank:-

i. Treasury

The Treasury Segment includes the entire investment portfolio and trading in foreign exchange contracts and derivative contracts. The revenue of the treasury segment primarily consists of fees and gains or losses from trading operations and interest income on the investment portfolio.

Corporate / Wholesale Banking

As per the RBI guidelines DBOD.No.BP.BC.81/21.04.018/ 2006-07 dated 18th April 2007, the Corporate / Wholesale Banking segment comprises the lending activities of borrowers having exposure of Rs. 5.00 Crores and above.

. Retail Banking

The Retail Banking Segment comprises of borrower accounts having exposure of less than Rs. 5.00 Crores.

Other Banking Operations Segments not classified under (i) to (iii) above are classified under this primary segment.

Secondary (Geographical Segment)

i Domestic Operations - Branches/Offices having operations in India

ii. Foreign Operations - Branches/Offices having operations outside India and offshore banking units having operations in India.

. Basis of allocation:

The interest income is allocated on the basis of actual interest received from different segments

Expenses not directly attributable are allocated on the basis of Interest income earned by the wholesale banking / retail banking segment/other banking segment.

Capital employed for each segment is calculated based on the assets and liabilities of that particular segment.

The Bank has certain common assets and liabilities, which cannot be attributed to any segment, and the same are treated as unallocated.

Segment Liabilities are distributed in the ratio of their respective Segment Assets.

Figures of the previous period have been re-grouped /reclassified wherever necessary.

*Figures are related to standalone Bank's financials for pre-amalgamation period, hence not comparable with post amalgamation financials.

17. Disclosure of Related Parties as per AS -18 issued by ICAINames of the related parties and their relationship with the Bank:

Key Management Personnel (KMP):

i) Shri CH S S Mallikarjuna Rao, Managing Director & CEO

ii) Dr. Rajesh Kumar Yaduvanshi, Executive Director, up to


iii) Shri Sanjay Kumar, Executive Director

iv) Shri Vijay Dube, Executive Director

v) Shri Agyey Kumar Azad, Executive Director, up to


vi) Shri Swarup Kumar Saha, w.e.f. 10.03.2021 Subsidiaries:

i) PNB Gilts Limited

ii) Punjab National Bank (International) Ltd.UK

iii) PNB Investment Services Ltd.

iv) Druk PNB Bank Ltd. Bhutan

v) PNB Cards and Services Ltd*

Incorporated on 16.03.2021. The Capital was infused on



i) PNB Metlife India Insurance Company Ltd@

ii) JSC (Tengri Bank), Almaty, Kazakhstan"

iii) PNB Housing Finance Limited

iv) Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.#

v) India SME Asset Reconstruction Co. Ltd.*

vi) Dakshin Bihar Gramin Bank, Patna

vii) Himachal Pradesh Gramin Bank, Mandi

viii) Punjab Gramin Bank, Kapurthala

ix) Sarva Haryana Gramin Bank, Rohtak

x) Prathama UP Gramin Bank, Moradabad

xi) Assam Gramin Vikas Bank, Guwahati

xii) Bangiya Gramin Vikas Bank, West Bengal

xiii) Manipur Rural Bank, Imphal

xiv) Tripura Gramin Bank, Agartala

xv) Everest Bank Limited, Kathmandu, Nepal

@PNB has acquired 30% stake in PNB Metlife India Insurance Company Ltd at consideration of '700.48/- as brand equity.

"AFR revoked license of JSC Tengri Bank w.e.f. 18.09.2020. Temporary Administrator has filed law suit for liquidation process of JSC Tengri Bank on 28th September 2020. On 15.02.2021, the decision on liquidation of JSC Tengri Bank came into force by the Appeal Court. On 19.02.2021, the Liquidation commission of Tengri Bank published information of liquidation of the Bank.

#After amalgamation Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd become an associate of PNB w.e.f. 01.04.2020.

*Earlier PNB 1.0, eOBC and eUNI had investment of 9%, 1.90% and 10% respectively in India SME Asset Reconstruction Co. Ltd (ISARC). Post-merger, ISARC has been classified as an associate of PNB w.e.f. 01.04.2020. PNB 2.0 is having share holding of 20.90% as on date.

I. Figures of the previous year have been regrouped /

rearranged / reclassified wherever necessary.

II. Figures in the bracket wherever given relates to previous


III. Figures of previous year relates to standalone Bank's

financials for pre-amalgamation period, hence not comparable with post amalgamation financials

18. Accounting Standard AS -19 Lease

i. Operating lease primarily comprise office premises, which are renewable at the option of the bank normally at the end of every 5th years.

ii. Amount of lease payment recognized in P & L Account for operating lease is ?790.74Crores.

iii. As per information available, Non-cancellable lease as on 31.03.2021: Nil

(ii) Current Tax: During the financial year ended 31.03.2021 the bank has debited to Profit & Loss Account '31.78 Crores (Previous year: debited '1784.58 Crores) on account of current tax. The current Tax in India has been calculated in accordance with the provisions of Income Tax Act 1961 after taking appropriate relief for taxes paid on foreign jurisdiction.

(iii) Tax Paid in advance/Tax deducted at source appearing under “Other Assets includes disputed amount adjusted by the department/paid by the Bank in respect tax demands for various assessment years.

No provision is considered necessary in respect of disputed Income Tax demands of '9835.82 Crore (Previous Year: '1131.50 Crore) as in the bank's view, duly supported by expert opinion and/or decision in bank's own appeals on same issues, additions / disallowances made are not sustainable.

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 financial year 2020-21 as per the earlier provision of Income Tax Act 1961.

21. Accounting Standard 23- Accounting for Invest ments in Associates in Consolidated financial Statements

Since Investments of the bank in its Associates are participative in nature and the Bank having the power to exercise significant influence on their activities, such Investments are recognized in the Consolidated Financial Statements of the Bank.

22. Accounting Standard 24 - Discontinuing Operations

During the period from 01.04.2020 to 31.03.2021, the bank has not discontinued operations of any of its branches, which resulted in shedding of liability and realization of assets and no decision has been finalized to discontinue an operation in its entirety which have the above effect.

23. Accounting Standard 28 - Impairment of Assets

A substantial portion of the bank's assets comprises ‘financial assets' to which Accounting Standard 28 ‘Impairment of Assets' is Not Applicable. In the opinion of the bank, there is no impairment of its assets (to which the standard applies) to any material extent as at 31.03.2021 requiring recognition in terms of the said standard.

ii) Refer Schedule-12 on contingent liabilities

Such liabilities at S.No.(I), (II), (III), (IV), (V) & (VI) are dependent upon the outcome of Court / arbitration / out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, respectively.

Note: Maintainable complaints refer to complaints on the grounds specially mentioned in BO Scheme 2006 and covered within the ambit of the scheme.

*Out of 14 Awards issued during the FY 2019-20, amounts in 13 Awards have been paid to the complainant during the FY 2019-20 and Appeal has been filed in 1 Award by the Bank and the same is pending at RBI level for disposal.

**Out of 12 Awards issued during the FY 2020-21, amounts in 8 Awards have been paid during the FY 2020-21, amount in 1 Award issued on 19.03.2021 has been paid on 16.04.2021 and Appeal has been filed in 3 Awards.

29. Disclosure of Letter of Comfort (LoC) issued by Bank

“The Bank has issued a Letter of Comfort to Prudential Regulation Authority (PRA), the regulator in United Kingdom, committing that the bank shall provide financial support to its subsidiary, Punjab National Bank (International) Ltd., UK so that it meets its financial commitments as and when they fall due”.

Apart from the above, the Bank has not issued any Letter of Comfort and therefore, there are no cumulative financial obligations under Letter of Comfort.

The Prudential Regulatory Authority (PRA), regulator of UK, has vide its letter dated 02.09.2015 put the Bank under ‘watch list'. There were no specific restrictions or penalties. PRA vide its letter dated 12.02.2021 has removed PNBIL from its ‘watch list'.

30. (i) Disclosure in respect of Insurance broking agency and Bancassurance Business including Mutual Fund Business undertaken by the bank:

36. Unhedged Foreign Currency Exposure (UFCE):

The Bank has framed a policy to manage currency induced credit risk and has been incorporated the same in bank's current Credit Management & Risk Policy as follows:

“In terms of RBI guidelines, Bank monitors the currency wise Un-hedged Foreign Currency Exposure in the books of borrowers at quarter ends along-with the Annualized Earnings before Interest & Depreciation (EBID). The incremental provision (ranging from 0 to 80 bps on total credit exposure, over and above the standard asset provisioning) and capital requirement will depend on likely loss (due to foreign currency fluctuation), that borrowers may face due to their un-hedged forex exposure in their books. Bank maintains separate charge and provisioning requirement on account of such exposures which may impact the cost to the borrowers. Appropriate disclosures in the financial statements of the bank shall also be made.”


The bank has implemented RBI guidelines on Liquidity Coverage Ratio (LCR) from 1st January 2015.

The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLAs) that can be readily converted into cash at little/no loss of value to meet its liquidity needs for a 30 calendar day time horizon under a liquidity stress scenario.

LCR has two components:

(i) The value of the stock of High Quality Liquid Assets (HQLA)-The Numerator.

(ii) Total Net Cash Outflows: Total expected cash outflows minus Total expected cash inflows, in stress scenario, for the subsequent 30 calendar days - The denominator.

For Q4 FY'2020-21, the daily average LCR was 190.97% (based on simple average of daily observations) at consolidated level, as against the regulatory requirement of 90%.

The main drivers of LCR of the bank are High Quality Liquid Assets (HQLAs) to meet liquidity needs of the bank at all times and basic funding from retail and small business customers. The retail and small business customer's contribute about 72.15% of total deposit portfolio of the bank which attracts low run-off factor of 5/10% as on 31.03.2021.

Composition of High Quality Liquid Assets (HQLA)

HQLAs comprises of Level 1 and Level 2 assets. Level 2 assets are further divided into Level 2A and Level 2B assets, keeping in view their marketability and price volatility.

Level-1assets are those assets which are highly liquid. For quarter ended March 31, 2021, the Level-1 asset of the bank includes Cash in Hand, Excess CRR, Government Securities in excess of minimum SLR, Marketable securities issued or guaranteed by foreign sovereign, MSF and FALLCR totalling to Rs. 323041.48 cr (based on simple average of daily observations).

Level-2A & 2B assets are those assets which are less liquid and their weighted amount comes to Rs. 9810.15 cr (based on simple average of daily observations). Break-up of daily observation Average HQLA during quarter ended March 31, 2021 is given hereunder:

Concentration of Funding Sources

This metric includes those sources of funding, whose withdrawal could trigger liquidity risks. It aims to address the funding concentration of bank by monitoring its funding requirement from each significant counterparty and each significant product/ instrument. As per RBI guidelines, a “significant counterparty/Instrument/

product” is defined as a single counterparty/Instrument/product or group of connected or affiliated counter-parties accounting in aggregate for more than 1% of the bank's total liabilities.

The bank has no significant counterparty (deposits/borrowings) as at 31.03.2021. Top 20 depositors of the bank constitute 3.69% of bank's total Deposit as at March 31, 2021. The significant product/ instrument include Saving Fund, Current deposit and Core Term Deposit, the funding from which are widely spread and cannot create concentration risk for the bank.

Derivative exposure

The bank has low exposure in derivatives having negligible impact on its liquidity position.

Currency Mismatch

As per RBI guidelines, a currency is considered as “significant” if the aggregate liabilities denominated in that currency amount to 5 per cent or more of the bank's total liabilities. In our case, only USD (12.36% of bank's total liabilities) falls in this criteria whose impact on total outflows in LCR horizon can be managed easily as the impact is not large considering the size of balance sheet of the bank.

Degree of centralization of liquidity management and interaction between group's units

The group entities are managing liquidity on their own. However, the bank has put in place a group-wide contingency funding plan to take care of liquidity requirement of the group as a whole in the stress period.