SYNOPSIS: Punjab National Bank is accelerating balance-sheet clean-up by selling large corporate bad loans, a relatively rare move, as it seeks to reduce legacy stress and strengthen financial health amid cautious lending trends.
During Thursday’s morning trading session, shares of a Banking and Financial service bank owned by the Government of India and India’s first Swadeshi Bank are in focus on the stock exchanges, after reports suggest that the bank has once again put bad loans worth more than Rs. 760 crore up for sale.
At 11:23 a.m., shares of Punjab National Bank were trading in the red at Rs. 123.3 on BSE, down by around 2 percent, compared to its previous closing price of Rs. 125.65, with a market cap of Rs. 1.41 lakh crores. The stock has delivered positive returns of around 21 percent in one year, and has gained by over 6 percent in the last one month.
Cleaning Up Legacy Stress
When Punjab National Bank comes up in conversation, the first thing that clicks our mind is the high-profile “Nirav Modi scam” that once shocked the Indian banking system. The case involved the misuse of letters of undertaking worth around Rs. 10,000 crore, making it one of the most widely discussed financial scandals in the country.
The spotlight fell on jeweller and designer Nirav Modi, his uncle Mehul Choksi, along with their associates and a few bank officials. Later, Nirav Modi and his relatives left India in early 2018, just days before the issue came to light.
Even years later, PNB continues to find its way into the headlines – this time for its ongoing clean-up of stressed assets. According to bid documents reviewed by The Economic Times, the lender has once again put bad loans worth over Rs. 760 crore on the block. These include accounts such as Gammon India and Simbhaoli Sugars.
This development comes shortly after a larger move just a week earlier, where the bank sought interest from asset reconstruction companies (ARCs) for a pool of stressed loans aggregating around Rs. 2,500 crore.
As part of the latest offering, PNB is looking to offload non-performing loans worth Rs. 514 crore from Gammon India and Rs. 226 crore related to Simbhaoli Sugars. It is also offering Rs. 94 crore of stressed loans linked to Ranchi Expressways, along with smaller exposures to Shree Basaveshwar Sugars, D.H. Enterprises India, and Bros Entertainment Shoppe.
In a separate initiative reported earlier on 27th December, the bank had invited bids from asset reconstruction companies to sell bad loans totalling Rs. 2,560 crore. That portfolio included exposures such as Rs. 468 crore from Millennium Expressway, Rs. 390 crore from Aban Offshore, Rs. 314 crore from Gupta Power and Infrastructure, and Rs. 236 crore from Moser Baer, along with nearly 20 other corporate loan accounts.
What makes this move notable is that banks have largely been focusing on selling retail and microfinance stressed assets in recent years. PNB’s decision to put corporate loan accounts on the block stands out as a relatively rare step.
Financials & More
PNB reported a marginal decline in net interest income (NII), experiencing a year-on-year decrease of around 0.02 percent, from Rs. 10,657 crores in Q2 FY25 to Rs. 10,654 crores in Q2 FY26. In contrast, its net profit increased during the same period from Rs. 4,432 crores to Rs. 4,848.6 crores, representing a growth of more than 9 percent YoY.
The bank reported a year-on-year decline in asset quality ratios, with gross non-performing assets (GNPA) falling from 4.48 percent in Q2 FY25 to 3.45 percent in Q2 FY26. Net non-performing assets (NNPA) also improved, declining from 0.46 percent to 0.36 percent over the same period.
Punjab National Bank is India’s first Swadeshi Bank owned by the Government of India, with its headquarters in New Delhi, India. It is engaged in the business of offering banking products, and also operates credit card and debit card business, bullion business, life and non-life insurance business, and gold coins and asset management business.
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