12. PROVISIONS, CONTINGENT LIABILITIES AND
CONTINGENT ASSETS:
In conformity with AS 29, ‘Provisions, Contingent Liabilities
and Contingent Assets', issued by the Institute of Chartered
Accountants of India, the Bank recognizes provisions only
when it has a present obligation as a result of a past event, and
it is probable that outflow of resources embodying economic
benefits will be required to settle the obligation, and when a
reliable estimate of the amount of the obligation can be made.
A Contingent Liability is a potential liability, in terms of money,
which may arise depending on the outcome of an uncertain
specific event. A possible obligation which may or may not
arise depending on how a future event unfolds has been
recognized as Contingent Liability.
Further, the cases which although have been filed against the
Bank, but possibility of any obligation arising upon the Bank in
those case is remote, have not been construed and included
in Contingent Liability.
Contingent Assets are not recognized in ''the financial
statements.
13. BULLION TRANSACTIONS:
The Bank imports bullion including precious metal bars on a
consignment basis for selling to its customers. The imports
are typically on a back-to-back basis and are priced to the
customer based on price quoted by the supplier. The Bank
earns a fee on such bullion transactions.
The fee is classified under commission income. The Bank also
accepts deposits and lends gold, which is treated as deposits/
advances as the case may be with the interest paid / received
classified as interest expense/income.
14. SEGMENT REPORTING:
The Bank recognizes the Business segment as the Primary
reporting segment and Geographical segment as the
Secondary reporting segment, in accordance with the RBI
guidelines and in compliance with the Accounting Standard 17
issued by ICAI.
15. The Bank, in accordance with RBI Circular FIDD.CO.Plan.
BC.23/ 04.09.01/ 2015-16 dated April 7, 2016, trades in Priority
Sector portfolio by selling or buying PSLC. There is no transfer
of risks or loan assets in these transactions. The fee paid for
purchase of the PSLC is treated as an ‘Expense' and the Fee
received from sale of PSLCs is treated as ‘Other Income'.
16. CASH & CASH EQUIVALENTS
Cash and cash equivalents include:
a) Cash and Balances with RBI, Balances with Bank and
money at call and short notice.
b) The balances in Reverse Repo are reported as per
the guidelines provided by RBI (i.e., under schedule 6,
schedule 7 and schedule 9, as applicable). The balance
held by the Bank under Standing Deposit Facility (SDF) is
also reported similarly.
* During the year, the Bank has issued 48,19,27,710 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 Securities & Exchange Board of India (Issue
of Capital and Disclosure Requirements) Regulations, 2018,
as amended at a premium of Rs.101.75 per share aggregating
to Rs.5,000 Crore approx. This has resulted in an increase of
Rs.96.39 Crore in the issued and paid-up Equity Share Capital
and Rs.4,891.18 Crore (Net of share Issue Expenses) in Share
Premium Account.
RBI vide circular no. DOR.CAP.REC.15/21.06.201/2023-24
dated May 12, 2023, 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.
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 31.03.2025. Top 20 depositors of the bank constitute 3.41% of
bank's total Deposit as on March 31,2025. The significant product/
instrument includes 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 (17
% of bank's total liabilities) falls in this criterion 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 the liquidity requirement of the group as a whole in
the stress period.
Qualitative Disclosure on Net Stable Funding Ratio
The Net Stable Funding Ratio (NSFR) and Liquidity Coverage
Ratio (LCR) are significant components of the Basel III reforms.
The LCR guidelines which promote short term resilience of a
bank's liquidity profile have been issued vide circular DBOD.
BPBC.No.120/21.04.098/2013-14 dated June 9, 2014. The NSFR
guidelines on the other hand ensure reduction in funding risk
over a longer time horizon by requiring banks to fund their
activities with sufficiently stable sources of funding in order to
mitigate the risk of future funding stress.
In the Indian context, the guidelines for NSFR were effective from
October 1,2021. The NSFR is defined as the amount of available
stable funding relative to the amount of required stable funding.
“Available stable funding” (ASF) is defined as the portion of
capital and liabilities expected to be reliable over the time horizon
considered by the NSFR, which extends to one year. The amount
of stable funding required ("Required stable funding") (RSF) of a
specific institution is a function of the liquidity characteristics and
residual maturities of the various assets held by that institution as
well as those of its off-balance sheet (OBS) exposures. The run¬
off factors for the stressed scenarios are prescribed by the RBI,
for various categories of liabilities (viz., deposits, unsecured and
secured wholesale borrowings), undrawn commitments, derivative-
related exposures, and offset with inflows emanating from assets
maturing within the same time period. The minimum NSFR
requirement set out in the RBI guideline for the standalone Bank
and for Group effective October 1,2021, is 100%.
The PNB on a consolidated basis at 31st March, 2025 maintained
Available Stable Funding (ASF) of ? 13,54,199 Crore against the
RSF requirement of ? 10,35,812 Crore. The NSFR for the quarter
ended March 31,2025, was at 130.74%.
The Available Stable Funding (ASF) is primarily driven by the total
regulatory capital as per Basle III Capital Adequacy guidelines
stipulated by RBI and deposits from retail customers, small
business customers and non-financial corporate customers.
Under the Required Stable Funding (RSF), the primary drivers are
unencumbered performing loans with residual maturities of one
year or more.
3.d Sale and transfers to/from HTM category:
The total value of sales of securities from HTM category after netting
permitted exclusions in terms of RBI Master Circular No. DOR.
MRG.36/21.04.141/2023-24 dated 12.09.2023 during 1st April 2024
to 31st March 2025 has not exceeded 5% of the opening carrying
value of investments held in HTM category as on 01.04.2024.
As such no disclosure is to be made in terms of extant RBI
guidelines.
(Previous year: The total value of sales and transfers of securities
to / from HTM category after netting permitted exclusions in terms
of RBI Master Circular No. DOR.MRG.42/21.04.141/ 2021-22
dated 25.08.2021 during 1st April 2023 to 31st March 2024 has
not exceeded 5% of the book value of investments held in HTM
category as on 31.03.2023.)
As such no disclosure is to be made in terms of extant RBI
guidelines.
3.e Non-SLR investment portfolio
3.e.i Non-performing non-SLR investments
7.c Disclosure on Risk Exposure in Derivatives
7.c.i 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.
15.f Accounting Standard 17 - Segment Reporting
Segment Identification
A. 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.
ii. Corporate / Wholesale Banking: As per the RBI guidelines RBI/2020-21/53, DOR.No.BP.BC.23/21.06.201/2020-21, dated 12th October
2020, the Corporate / Wholesale Banking segment comprises the lending activities of borrowers having exposure of ?7.50Crores and
above.
iii. Retail Banking: The Retail Banking Segment comprises of borrower accounts having exposure of less than ?7.50 Crores.
As per RBI Circular RBI/2022-23/19 DOR.AUT.REC. 12/22.01.001/2022-23 dated April 07, 2022, for the purpose of disclosure under
Accounting Standard 17, Segment Reporting issued by ICAI, Digital Banking Segment has been identified as sub-segment under Retail
Banking by Reserve Bank of India (RBI). As on March 31,2025, 8 (eight) Digital Banking Units (DBUs) of the Bank are operating and the
segment information disclosed as Digital Banking under Retail Banking Operations is related to the said DBUs.
iv. Other Banking Operations: Segments not classified under (i) to (iii) above are classified under this primary segment.
B. 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.
C. Basis of Allocation:
i. The interest income is allocated on the basis of actual interest received from different segments.
ii. Expenses not directly attributable are allocated on the basis of Interest income earned by the wholesale banking / retail banking segment/
other banking segment.
iii. Capital employed for each segment is calculated based on the assets and liabilities of that particular segment.
iv. The Bank has certain common assets and liabilities, which cannot be attributed to any segment, and the same are treated as unallocated.
Current Year - The deferred tax assets of ?1,598.06 Crore is
debited to Profit & Loss Account for the year ended 31.03.2025.
(Previous Year - Debited ?1,019.63 Crore).
Current Year - The deferred tax liabilities of ?204.54 Crore have
been created from AFS reserve (Credit Balance) in relation to
Investment for the financial year ended 31.03.2025. (Previous Year
- Nil).
Current Year - The deferred tax assets of ?0.67 Crore have been
credited on AFS reserve (Debit Balance) in relation to investment
for the financial year ended 31.03.2025. (Previous Year - Nil).
15.j.ii Current Tax: During the current financial year ended
31.03.2025 the Bank has debited ?6,927.81 Crore to Profit
& Loss Account. (Previous financial year ended 31.03.2024:
Debited ?3,929.96 Crore) on account of current tax after
reversal of provision of earlier years of ?1,062.92 Crore
(Previous financial year ended 31.03.2024: Nil). Accordingly,
the total tax expenses on account of current tax & deferred tax
charged to Profit & Loss account amounts to ?8,525.87 Crore.
15.j.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 of tax demands
for various assessment years.
15.j.iv No provision is considered necessary in respect of disputed
Income Tax demands of ?11,413.24 Crore as on current
financial year ended 31.03.2025 (Previous financial year
ended 31.03.2024 - ?6,956.02 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.
15.j.v The Bank has evaluated the options available under section
115BAA of Income Tax Act, 1961 and opted to continue to
recognize the taxes on income for the financial year ended
31.03.2025, as per the earlier provisions of Income Tax Act,
1961.
15.j.vi The current tax expenses and deferred tax expenses are
determined in accordance with the provisions of the Income
Tax Act, 1961 and as per the Accounting Standard 22-
“Accounting for Taxes on Income” issued by the Institute
of Chartered Accountants of India respectively. 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.
15.k Accounting Standard 23 - Accounting for Investments 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.
(Previous year: 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).
15.l Accounting Standard 24 - Discontinuing Operations
During the current financial year (FY 2024-25), the Bank has
not discontinued any 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.
(Previous year: During the previous financial year (FY 2023¬
24), 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).
15.n 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 31.03.2025 requiring recognition in
terms of the said standard.
(Previous Period: 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 31.03.2024
requiring recognition in terms of the said standard).
17. Disclosure: Letter of Comfort (LoC)
17.a Regarding RRBs
As on 31.03.2025, PNB (as a Sponsor Bank) has issued
Letters of Comfort in favour of Micro Units Development
& Refinance Agency Limited (MUDRA Ltd.) on behalf of
Assam Gramin Vikash Bank (AGVB), Manipur Rural Bank
(MRB) for enabling these Sponsored RRBs to become
Member Lending Institutions (MLIs) for MUDRA Loans.
On the basis of the financials of the above RRBs and
Letter of Comfort issued by us, MUDRA worked out the
exposure limits for AGVB and MRB and these RRBs were
accepted as MLI up to the exposure limit under MUDRA
for ?71.00 Crore and ?1.92 Crore respectively. Further
to confirm that both the banks AGVB and MRB have not
availed any refinance from MUDRA as on 31.03.2025. For
Himachal Pradesh Gramin Bank, we have issued LOC
to MUDRA on 26.09.2024. However, fixation of limit by
MUDRA is awaited. Hence, there is no financial impact.
17.b Regarding Subsidiaries and other Associates
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.
The said Letter of Comfort has been renewed on
18.02.2025 after seeking approval of our Board in favor
of PRA w.r.t. our subsidiary PNBIL wherein we have
reiterated our commitment. The renewal was done as per
instruction of PRA and RBI. Further, Annual assessment
of impact of LOC was approved by the Board in its
meeting held on 28.02.2025, as per which the Bank does
not foresee any crystallization of financial obligation.
Therefore, there is no financial impact on account of this
LOC for FY 2024-25.
Apart from the above, the Bank has not issued any
Letter of Comfort to Group Entities (subsidiaries and
associates).
18. Disclosure: Letter of Undertaking (LoU)
The Bank has provided a Letter of Undertaking for PNB IBU Gift
City Branch under Regulation 3 (3) of International Financial
Service Centre Authority (IFSCA):
- That Bank will provide support and assistance (including
liquidity, whenever needed) and as may be appropriate to
enable the banking unit to meet its obligations in the course
of its obligation.
Apart from the above the Bank has not issued any Letter of
Undertaking for overseas branches and there are no cumulative
financial obligations under the Letter of Undertaking.
19. Reward Points of Credit Card
PNB Credit Card holders are rewarded as and when they make
purchases through usage of Credit Card. Reward Points are
generated at the time of usage of Credit Card by Cardholder
at merchant Establishment. Card holders can redeem the
accumulated reward points. The amount payable on account
of reward points is charged to the Profit and Loss account and
credited to Sundry Provision Account on daily basis.
22. As per RBI guidelines, the Bank worked out the amount of
Inter Branch Credit entries outstanding for more than 5 years
to create a Blocked Account. Accordingly, a sum of ? Nil
Crore (Previous Period ? Nil Crore) [net of adjustments since
carried out has been included under “Other Liabilities-others”
in Schedule-5].
23. Premises include 10 properties amounting to ?3.72 Crore
(Cost) & depreciation amount to Rs. 2.40 Crore are awaiting
registration of title deeds.
Previous Period (31.03.2024): Premises include properties
amounting to ?3.72 Crore (Cost) & depreciation amount to Rs.
2.27 Crore are awaiting registration of title deeds.
24. Premises include Capital work in progress of ?295.62 Crore
for the year ended 31.03.2025 (?115.23 Crore in the previous
year ended 31.03.2024).
25. Guidelines given in Micro, Small and Medium Enterprises
Development Act 2006 have been complied with for purchases
made during the year ended March 2025 (FY 2024-25) and
payments have been made to the Vendors in time as per Act.
Since there had been no delay in payment, no penal interest
applicable during the year ended March 2024 (FY 2024-25).
26. Depreciation on Revalued Portion of Premises for the year
ended March 2025 is ?100.09 Crores (?167.79 Crore for the
previous year ended March 2024).
27. In compliance of RBI letter no. BPC.7201/21.04.132/2017-18
dated 08.02.2018, Bank has made a provision of ?81.20 Crore
being 5 % of the existing outstanding of ?1,624.00 Crore as on
31.03.2025 in respect of Advance to Government of Punjab
Long term Loan (LTL).
28. As per 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 under the provisions of Insolvency &
Bankruptcy Code (IBC), where the Bank is having exposure, the
Bank is holding total provision of ?6,749.62 Crore (Aggregate
provision for RBI List 1 and List 2 accounts is 100%) as on
31.03.2025. (Previous Period: ?7,991.75 Crore (Aggregate
provision of RBI List 1 and List 2 accounts is 100%) as on
31.03.2024).
29. As on March 31, 2025, the Bank is holding an additional
provision of Rs.134.19 Crore on standard accounts
restructured under COVID 19 Resolution Framework 1.0 and
2.0, at higher than prescribed rate of 5%/10%, as per Bank's
policy based on the evaluation of risk and stress in these
sectors, in terms of RBI Master Circular dated April 01, 2025
regarding Prudential norms on Income Recognition, Asset
Classification and Provisioning pertaining to Advances.
30. The Board of Directors has recommended a dividend of ?2.90
per equity share (145.00%) for the year ended March 31,
2025, subject to requisite approvals.
31. In terms of RBI Circular no. DOR.ACC.REC.
No.91/21.04.018/2022-23 dated 13.12.2022, the disclosure
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