How PNB is feeling the pinch from wilful defaulters at both ends

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At Rs.11,432 crore, Punjab National Bank (PNB) had the second largest portfolio of wilful defaulters: borrowers who have defaulted on meeting their loan commitments despite having the ability to make payments or who are in violation of some part of the loan agreement. PNB is also perhaps the only bank that has been making public, at three-month intervals, a list of these borrowers. An analysis of PNB’s lists for December 2014 and February 2016, during which its number of wilful defaulters multiplied 2.6 times, shows how truant borrowers are biting the bank at both ends.

At the top, the bulge is due to loan size…

The number of wilful defaulters grew at a faster clip than their amount at default. As a result, the average amount per wilful defaulter fell. However, what this masks is the rising distress among big borrowers. The top 10% and 25% of PNB’s wilful defaulters now account for 75% and 90% of the amount at risk, respectively—an increase over the corresponding 2014 figures.



… and half of the top 15 were not there in 2014

Of the top 15 wilful defaulters by loan size, eight were not there in 2014. And three of these eight are units of Ramsarup Industries.




At the bottom, the bulge is due to growing number of wilful defaulters

Along with an increase in large defaulters, PNB has also seen smaller defaulters grow at a faster pace than the portfolio average—an indication of the widening of the bad-loans problem.




They are now spread across twice as many cities

New Delhi (148 cases), Mumbai (90 cases) and Chandigarh (62 cases) still lead PNB’s city-wise list of wilful defaulters. But the number of cities has nearly doubled, another indication of the widening of the bad-loans problem.




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