The bank expects Rs 700-crore expenditure on its voluntary retirement scheme (VRS) to make a dent in its bottomline for fiscal 2000-01 even though it has not yet decided how to amortise the cost, the chairman said.

Mr Kohli said the bank is yet to decide whether to make a one-time provision or spread it out over five years. "We are waiting for the policy decision from the Central Board of Direct Tax for taxing the ex-gratia payments and only then will we decide the provisioning structure," he said.

The bank reported a net profit of Rs 400 crore for the year to March 31, 2000. For the first nine months of the current year, the net profit was Rs 345 crore.

The VRS expenditure will also hit the capital adequacy ratio, now at 10.31 per cent, Mr Kohli admitted. "Of the total of 6,000 VRS applicants, we have already relieved 5,800," he added.

The bank has decided, in principle, to enter the insurance business and has applied to the RBI for permission. "We will go for both life and non-life insurance sector," he added. Mr Kohli said the bank aims to spend Rs 150 crore on upgrading technology, including computerising 74 per cent of its branch network and setting up of 125 ATMs. A PNB official said the management has decided to connect a number of its branches online and the Infosys Technologies will be appointed for the purpose.

"The technology plan will include setting up of a fast collection service and electronic fund transfer system," Mr Kolhi said.

He said the management expects an overall business growth of 22 per cent by the end of the current fiscal. "We expect the deposit base to grow by 18 per cent and advances by 20 per cent," he added.

According to him, PNB's net non-performing assets (NPAs) accounted for 8.52 per cent of net advances during fiscal 1999-2000. He expected the figure to fall below eight per cent by the end of the current fiscal.

"Our gross NPA was 12.5 per cent in 1999-2000 and we expect to bring it down to below 12 per cent during the current fiscal," Mr Kohli said.