Understanding Banking Policies and Financial Performance

The bank's approach covers several specialized domains:

1. Operational Risk Management Policy: Focuses on mitigating losses resulting from inadequate or failed internal processes, people, and systems.
2. Credit Risk Mitigation & Collateral Management Policy: Establishes standards for securing loans through tangible and intangible assets.
3. Climate Risk Management Policy: Addresses the emerging risks posed by environmental changes, including the implementation of the "PNB Harit Niwas" scheme for sustainable housing.

Credit Management and Lending Policies

Credit is the core of banking, and PNB utilizes a diverse array of policies to manage its lending portfolio.

Sector-Specific Lending

The bank adheres to Priority Sector Guidelines to ensure credit reaches vital segments of the economy, such as Agriculture and MSMEs.

• MSME Sector: PNB provides specialized lending to the Micro, Small, and Medium Enterprises sector, including the use of specialized MSME branches in districts where MSME advances exceed 60%.
• Co-Lending & Factoring: To enhance liquidity and reach, the bank employs Co-Lending Policies and Factoring Policies to support business cash flows.

Exposure and Limits

To prevent concentration risk, the bank enforces strict Exposure Norms. For example, the "Large Exposure" framework limits counterparty exposure for NBFCs based on their credit rating.

The bank also monitors its Unsecured Exposure Ceiling, which is capped at 30% of total bank exposure. Within this, specific limits apply:

• Credit Cards: 1.00%
• Personal Loans: 5.00%

![A diagram illustrating the breakdown of the 30% Unsecured Exposure Ceiling, showing the sub-limits for Credit Cards and Personal Loans as portions of the total allowed unsecured limit.

Crucial liquidity and stability metrics include:

• Leverage Ratio: Measures non-risk-based capital against total exposure. PNB reported 6.91% in June 2026 (Requirement: 3.50%).
• Liquidity Coverage Ratio (LCR): Ensures the bank has enough high-quality liquid assets to survive a 30-day stress scenario. PNB reported 141.35% (Requirement: >100%).
• Net Stable Funding Ratio (NSFR): Focuses on long-term structural liquidity. PNB reported 125.98% (Requirement: $\ge$ 100%).

Audit and Governance

To ensure the integrity of its operations, PNB employs a multi-layered audit and compliance structure:

• Concurrent Audit Policy: Real-time verification of transactions.
• Risk-Based Internal Audit (RBIA) Policy: A more strategic approach that focuses audit resources on areas with higher risk profiles.
• Revenue Audit Policy: Ensures all income streams are accurately captured and recorded.
• Whistle Blower Policy: Provides a mechanism for employees and stakeholders to report unethical behavior without fear of retaliation.
• Group Compliance Policy: Ensures that all subsidiaries and associated entities adhere to the bank's overarching regulatory standards.

Note on Interest Rates: For floating-rate loans, PNB utilizes the RLLR (Repo Linked Lending Rate). The calculation follows this structure: $\text{RLLR} = \text{Repo Rate} + \text{Markup} + \text{BSP}$ Where BSP is the Business Strategic Premium.