The Verma committee report has listed Punjab & Sind Bank as one of the six banks showing distress signs. Capital adequacy ratio (CAR), net interest margins and ratio of profit to average working funds have been identified as the worrying areas for the bank. Punjab & Sind Bank had improved its CAR to 12 per cent in May by raising capital through the tier-two route.

A high level of non-performing assets and cost of deposits remain the root cause of the problems like depressed margins and profitability. The bank has been taking steps to reduce NPA in the last three years. ``When I took over, the gross NPA was 29 per cent and today it is 16 per cent. Our target is to reduce it to 15 per cent this year,'' Kohli said. Despite all these efforts, PSB's net NPA is 10.48 per cent against the industry average of 8.48 per cent. ``I want to bring it down to the industry level this year itself,'' said PSB chairman who remained unruffled but serious enough to see the distress signal sounded by the RBI's expert committee.

Another worrying area for PSB is the high cost of deposits. ``My cost of deposits is 8.5 per cent which I want to reduce,'' Kohli said. The best way to reduce the cost of deposits as being devised by the PSB brass is to collect more funds under the current accounts and saving deposits. ``The cost of funds in the current account is nil whereas it is 4.5 per cent in the saving bank accounts,'' he said.

Punjab & Sind Bank depends on the current accounts and saving bank accounts to the extent of 30 per cent of total deposits. ``We would like it to increase it to 35 per cent,'' Kohli said. PSB has realised that development of human resource conscious of costs must get due weightage in case there has to be an impact on the bottomline. `The training changes the officers outlook at the branch level. We trained 52 officers last year.'' The nationalised banks have not been aggressive in modernisation of operations and designing the technology-savvy products. The Verma committee has put a lot emphasis on the use of information technology in the banking sector. For three weak banks -- Indian Bank, UCO Bank and United Bank -- alone the committee recommended a budget allocation of Rs 400 crore.

How is PSB addressing the IT issue? ``We have computerised 220 branches and made the bank Y2K compliant,'' Kohli said. Besides, the bank has opened a computer learning centre at Chandigarh. Another such centre would soon be opened in Delhi. PSB has engaged the Pune-based national institute of bank management for devising an asset-liability management techniques in the wake of changes in the risk environment.

Summing up, Kohli did not really disagree with the problem areas highlighted by the Verma committee but was emphatic that the bank's performance in the last three years should not be lost sight of. ``When I took over three years back, the bank was making an annual loss of Rs 132 crore. Last year, we made a profit of Rs 60 crore''. The turnaround is happening but would take some more time before the bank is totally in a comfortable position.