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PSB, which is talking of a Rs 100-crore IPO, has embarked on drafting clear-cut policies and strategies to concentrate more on core and retail banking operations to take it to the top slot by 2008.

FROM being clubbed among the weak banks barely a couple of years ago to initiating plans for an Initial Public Offer during the current financial year is the story of Punjab and Sind Bank's (P&SB) remarkable turnaround. And the bank's Chairman and Managing Director, Mr N.S. Gujral, says the story is far from over.

"We aim to be the numero uno bank of the country in service, technology, products and financials by the year 2008," he said. 2008 would be the year when the bank completes 100 years of existence.

The bank, which is talking of a Rs 100-crore IPO, has embarked on drafting clear-cut policies and strategies to concentrate more on core and retail banking operations. The Business Plan for 2003-04 aims at a growth of 17 per cent in business to reach a total turnover of over Rs 23,000 crore by March 31, 2004, comprising Rs 15,600-crore deposits and Rs 7,400-crore gross advances.

Mr N.S. Gujral, CMD.

Besides the IPO aimed at bolstering the capital adequacy from the present 10.43 per cent, P&SB is planning to provide greater transparency in its financials by adopting the US Generally Accepted Accounting Principles (GAAP) for the financial year 2002-2003.

"We are in the process of appointing a company of international repute to advise us on the new accounting processes. We hope to be the third bank, after Corporation Bank and Oriental Bank of Commerce, to adopt the proposed US accounting standards," Mr Gujral said.

With its newfound confidence, P&SB recently decided to spread out in other areas with the signing of a memorandum of understanding with Bajaj Alliance General Insurance Co. Ltd for marketing and distributing their non-life insurance products. "The bank has already received the Reserve Bank of India's permission to take up non-life insurance distribution business as a corporate agent. All our 757 branches will sell insurance products. The bank hopes to earn substantial fees by taking up this activity," Mr Gujral said.

Like its peers, P&SB is also going the whole hog in ensuring technology upgradation. During the current year, the number of partially computerised branches grew by 255 to 850. "We have drawn up elaborate plans to increase the number of fully computerised branches to 100 by March 31, 2004, from 37 at present," Mr Gujral said.

The IT initiative has brought 73.59 per cent of the bank's total branch network under computerisation and has captured 83 per cent of the bank's business. P&SB also plans to add 25 ATMs in different cities during the current financial year.

Attacking a crucial area, P&SB has also decided to make a concerted effort to drastically prune its non-performing assets (NPAs). "The bank's main focus will be to aim at reducing NPAs by 30 per cent along with a major reduction in cost of deposits by the financial year 2003-2004," Mr Gujral said.

Providing a quick update on the bank's latest financials, Mr Gujral pointed out that for the year 2002-03, the bank has been able to show net profits of Rs 4.43 crore, which is the seventh successive year that the bank has been in profits. "There has been a dip over the previous fiscal's net profit (Rs 23.04 crore on March 3, 2003) due to high net provisions, amounting to Rs 276.41 crore made by the bank during the financial year 2002-03 compared to Rs 140.66 crore the year before. This was done to clear the entire backlog of old short provisions and divergence, amounting to Rs 221.57 crore outstanding for the last several years. The one-time clean-up would only result in improving the intrinsic strength of the bank," Mr Gujral said.

The operating profits of the bank zoomed by 71.55 per cent from Rs 163.70 crore for the year 2001-02 to Rs 280.84 crore for the fiscal ended March 31, 2003. The bank has recorded an operating profit of Rs 28.86 crore for the first quarter ended June 30, 2003, as against Rs 23.47 crore during the same period last year.

Mr Gujral says as part of its strategy to reduce costs, the bank is attempting to eye low-cost deposits and has been successful in its endeavours, leading to a reduction in cost of deposit from 7.59 per cent as March 31, 2002, to 6.79 per cent as on March 31, 2003. Cost of Deposits has further reduced to 6.42 per cent as on June 30, 2003.

By A Correspondent

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