PNB to focus on fee-based income

By Our Special Correspondent

CHENNAI, DEC. 25. The Punjab National Bank will concentrate on increasing fee-based income from services like demand drafts, remittances and lockers which accounted for only 14 per cent of the bank's revenue compared to 40 per cent in the case of foreign banks, Mr. S. S. Kohli, Chairman and Managing Director, said here today.

The bank would give greater freedom to managers to offer lower rates for such services to expand the bank's market share. ``Except for the cost of deposits, the rest of the operational cost should be met from fee-based income'', he said, addressing the inaugural session of the two-day 18th general council meeting of the All India Punjab National Bank Officers' Association (AIPNBOA).

In respect of advances, he said PNB would expand financing of consumers, retail trade and housing.

Mr. Kohli announced that the bank had decided to raise the rental limit for officers from April 1 next. Regarding promotions, it would be firm in its view that interviews were not necessary where written tests had been conducted. It would also try to reduce the uncertainty and delay in promotion of officers suspended pending a finding.

Declaring that the PNB was in a position to meet competition, which he expected to come more from within the nationalised sector than from private banks, Mr. Kohli said the deadline for one-time settlement (OTS) of dues would not be extended (by the government) beyond April next.

Hence officers should do their utmost to bring more and more borrowers under the non-discretionary and non-discriminatory OTS, since every Rs. 1 lakh recovered under the scheme contributed Rs. 60,000 to the profitability of the bank. However, the OTS was only a crash programme and the government should expedite legal reform so that non-performing assets could be minimised.

Mr. S. R. Sengupta, general secretary, All-India Bank Officers' Confederation (AIBOC), said the voluntary retirement scheme (VRS) would prove a further drag on the health of nationalised banks, which had already been affected by application of prudential norms which had no relevance to India. Even loans to bank staff, which were the safest asset, had to be provided for on the assumption of 100 per cent risk in terms of Reserve Bank of India guidelines.

Succumbing to the pressures of the ``current westerly wind'' (reforms based on pressures from the World Bank and the International Monetary Fund) would result in take-over of the banks by private corporates which enjoyed 50 per cent of bank credit, while contributing to 3.9 per cent of savings, compared to 69 per cent by the household sector, Mr. Sengupta said.

Mr. S. Shantha Raju, President, AIBOC, said the banks would be able to face competition if the government ensured a level- playing field where foreign and private sector banks would be obliged to open branches in all nooks and corners of the country and undertook developmental obligations on an equal footing.

The merger of the ICICI Bank with an old generation private sector bank with a large network of branches was intended to ``show the (positive) balance-sheet of the merged entity to the international community''.

Privatisation of nationalised banks would pose a serious threat to food security and survival of small scale industries, he warned. Questioning claims of surplus of officers, he said banks should ``globalise internally'' by adopting the right human resources, personnel and administration programmes.

Mr. K. D. Khera, general secretary, AIPNBOA, wanted the bank to restructure its northern zone reflecting the large size of its operations there.

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Section  : Business
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