We will expect a total of Rs 22,000 crore of recoveries and upgrades in FY19, Sunil Mehta, MD & CEO, PNB, tells ET Now in an 66149020

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exclusive interview.Edited excerpts: What is the roadmap for Punjab National Bank going ahead?In a nutshell, I can say PNB is on track to bounce back during the current financial year. The bank has made a historic recovery of Rs 8,445 crore as against last year’s total recovery of Rs 5,416 crore. Going forward, we have decided that during the current financial year we will be able to recover roughly Rs 17,500 crore from the NPA accounts, besides upgrading of Rs 4,500 crore in the accounts. So, we are targeting a recovery of Rs 22,000 crore for the current financial year.Is the current market rout a cause of worry?Of course, there is a temporary aberration in the market but on a long-term basis, we believe that the fundamentals including that of the enterprises and especially subsidiaries are very strong. PNB Housing Finance could raise a substantial amount of ECBs. Their liquidity position is much more better than the rest of the peers. So far as our fundamentals are concerned, that is more important for the market than for a temporary aberration. We are hopeful that these temporary aberrations will go away in a short span of time and we will be able to realise the value we are aspiring for.Is PNB Housing Finance stake sale off the cards for this fiscal year due to the current market rout?Whenever you go for a stake sale, it is a function of the market. The fair valuation is basically decided by the market. We are on the track, the process is already on and we have already invited the expression of interest. The process is going to continue because as we think the aberrations in the market are very temporary in nature. By the time we will come for a stake sale in actual terms, the market will be able to stabilise. That is our perception about the market.So can we say that over the next six months, PNB Housing Finance stake sale is very much on the cards? Are a lot of important players are in the fray?Yes, of course, there are a lot of important players who have shown interest in it. They are long-term investors. They are going to acquire the entire stake of the company. Anybody who wants to acquire the entire stake of the company will be looking at the long term profitability and the fundamentals of the company is still very strong. We are hopeful that we will be able to get a good realisation from the stake sale.What is the roadmap for the stake sale in PNB MetLife?In case of PNB MetLife, it is basically a process of price discovery of our equity because we hold 30% and we are going to dilute only 4% of it. That 4% is basically to facilitate other investors to realise their values. We think there is a great value in the enterprise which we will hold for a longer time.Have you done your due diligence as to where things stand from here on for PNB MetLife?We are on track and the actual realisations will depend on the market conditions.In terms of timeline, what are we looking at?We are planning to go ahead with our projects during the current financial year itself.So PNB MetLife as well as PNB Housing Finance stake sale both are very much on track?We will continue our efforts during the current financial year.You were also looking to hive off a lot of non-core assets, a case in point the old headquarter of PNB at Bhikaji Cama Place. Has anything worked on that front?We are already in negotiations with two or three important government departments. Things are moving and we are hopeful that everything will be concluded during this financial year.Would you be able to surpass your recovery target of Rs 22000 crore?If you see even the first half, we have roughly done more than Rs 13,000 crore of recovery during the first half. That gives us a good advantage and we will definitely be able to surpass our target of Rs 22000 crore.Despite the current market rout?Yes, currently there is a turmoil in the equity markets but we are more interested in monetising the money locked up into our impaired assets, that is basically NPLs. All these processes are going on. We are getting very good response for the newly launched special 25 crore OT scheme. Our retail recovery is coming very fast and with the passage of time, if the NCLT resolutions also come up in Q3, that will give a boost to our recovery efforts.What is the number you are looking at for retail recovery?If you take out the impact of NCLT recoveries during the Q1 and Q2, we have done a retail recovery of roughly Rs 10,000 crore. So out of total recovery of Rs 13,000 crore, the contribution from NCLT was roughly Rs 3200 crore. The rest is from retail recoveries.The government has given about Rs 7,000 crore. Where do you see the capital needs for this fiscal year?The government is really supporting us in a very nice way. This is the second largest public sector bank and we are systematically important for the country and the government is really supporting us in that way. The first dose of Rs 2,817 crore was infused in this current quarter and second tranche of Rs 5,431 crore has come to us. So that means roughly Rs 8,247 crore is already with us.Will you seek more capital from the government?I do not think so. I think we are able to mobilise the balanced resources from our internal accruals and recoveries…So what is the balanced resources that you are looking at?If we are able to monetise one of the non-core assets, there could be a speedy recovery. The resolutions in steel assets are coming at a very good valuation. In some of the cases, we may realise 100% of our outstanding exposure. If we realise 100% of outstanding exposure, we already have a provision of 50%, the 50% will be written back into our profitability.That is one of the way of internal accrual and whatever other legal recoveries we are doing. Our realisations are good and there will be a lot of good inflow from NPL recoveries during the second half. Steel sector is the one sector that you are betting big on. How are things stacking up on the NCLT front especially in the Essar Steel case? Between the initial bids which the bankers received in the CoC and the revised bids which we have received, the amount has gone up substantially. In some cases, where we were getting about 55-60%, now we are realising 100% of our outstanding book values.That gives a lot of comfort and the judicial process is facilitating the value maximisation. We appreciate that.