Atul Kumar Goel, MD and CEO at Punjab National Bank (PNB) on Tuesday spoke on a number of topics, ranging from lender's quarterly numbers to the withdrawal of Rs 2,000 notes. Goel provided insights on the expected credit loss (ECL) guidelines too. He said that the current information is based on draft guidelines issued by the Reserve Bank of India (RBI) and it is necessary to await the final guidelines for a comprehensive understanding.
On Rs 2,000 notes exchange, he provided reassurance that PNB is fully equipped to accept the
Rs 2,000 denomination notes in their branches, ensuring customers face no liquidity-related inconveniences.
On lender's earnings, Goel said it is crucial to focus on the underwriting quality when considering ECL.
Based on the figures, PNB is confident and not concerned about ECL, aiming to align itself with industry standards.
Notably, the central bank issued a discussion paper on ECL in January 2023, seeking to move banks towards an expected loss approach with respect to bad loans. Lenders have recently sought one-year extension from the RBI for implementation of the ECL-based loan loss provisioning framework.
Under the ECL norms, banks will be required to classify financial assets into one of the three categories – Stage 1, Stage 2, and Stage 3, depending upon the assessed credit losses on them.
Going forward, PNB aims to achieve a gross NPA ratio of less than 7 percent and a net NPA ratio below 2 percent by the financial year 2023-24 (FY24).