Punjab National Bank needs 6 months, says MD

New Delhi: The scam-hit Punjab National Bank said on Friday that it will take at least six months to come back to normalcy after it being hit by Rs 11,400-crore fraud even as the board considers a strategy to exit non-core assets.

This was stated by bank’s MD and CEO Sunil Mehta in a conference call with investors. He sought reassure them that the bank had more than sufficient capital as mandate by regulations. 

The bank is also considering to expedite sale of some of its fixed assets, including few office buil-dings not in use presently, for about Rs 500 crore by March-end, sources said. “We will get back to normalcy within six months. The bank has the size and capacity to come out of the problem,” said Mr Mehta.

He said that PNB has a lot of resources  and non-core assets to get out of the problem. Mr Mehta said that this was a standalone case and only one branch has reported such a case. He said that the bank has also scanned other branches for the problem. 

Mr Mehta said that the bank is in the process of fixing the problem and mitigating the risks. The sources said that the bank is planning to monetise some of its fixed assets and the bank has large number of properties which are lying vacant. The bank would look to sell assets through a tendering process. “We are in talks with interested parties,” said the source. 

“If the bank is able to get the right price, the monetisation could happen by March-end itself,” said sources. During the fiscal, the bank has monetised 5.9 per cent stake in PNB Housing Finance for Rs 1,321 crore. It also exited the asset management business PNB Principal and earned Rs 125 crore. 

The country’s second largest bank has earned about Rs 1,450 crore through stake sale in these two companies.

Morgan Stanley estimated on Thursday if PNB had to assume all the liability from the fraud it would need Rs 8,000 crore in additional capital, which at the stock’s current valuation would mean a 14 per cent dilution.