Profile of Punjab National Bank: Saga of Excellence
Fired by the spirit of nationalism and founded on the idea that Indians should have a national bank of their own, Punjab National Bank Ltd was the result of the efforts of far-sighted visionaries and patriots, among whom were persons like Lala Lajpat Rai, Mr. E C Jessawala, Babu Kali Prasono Roy, Lala Harkishan Lal and Sardar Dyal Singh Majithia.
Incorporated under the Act VI of 1882, Indian Companies Act, the Bank commenced operations on April 12, 1895 from Lahore, with an authorized total capital of Rs 2 lac and working capital of Rs 20,000.
Prophetically, the Bank choose "Stability" as its telegraphic address, as the future course of events were to prove - the Bank withstood various financial crises including the trauma in the form of partition of India when the Bank had to close 92 offices (33per cent) in west Pakistan which constituted 40 per cent of its deposits and 15 of its staff fell victims to the frenzy. The registered office was shifted to Delhi and the Bank honoured all the deposit claims of the refugees even on the basis of whatever little evidence they could produce. Subsequently, the Bank registered impressive performance and grew from strength to strength. A pioneer throughout, the Bank distinguished itself by appointing auditors in 1895 long before it was mandatory; introduced the "teller" system in 1944 (another first ); established profit sharing bonus, provident fund and voluntary outside audit well before they formed keystones of good management.
Nationalization came in 1969 which unleashed a new chapter in the long history of the Bank. Keeping with the economic ideology of catalyzing development and amelioration of poverty by funding various self-employment schemes, Punjab National Bank (PNB) expanded its presence rapidly in unbanked areas. The Bank donned the role of a facilitator in providing the vital input of credit and consistently exceeded the national goals in respect of priority sector lending. With its large presence throughout the country and with a view to strengthening the rural credit delivery system, the Bank sponsored Regional Rural Banks (RRBs).
PNB has established itself firmly as one of the premier banking institutions in the country with a long tradition of sound and prudent banking. The bank's growth has been aided by take-over/merger of 7 private sector banks during different periods in its history. The first ever and the only merger of a nationalized bank with PNB was in 1993, viz., New Bank of India.
By late 1980s when the first whiff of liberalization came about, the Bank initiated strategic moves towards diversification; and in 2002, 20 per cent of government ownership was disinvested through a very successful IPO to the public. In 2003, the erstwhile Nedungadi Bank Ltd (e-NBL), a Kerala based private bank was amalgamated with Punjab National Bank. This was the seventh merger in PNB’s history of more than 115 years. PNB’s management team has been quite successful in managing the mergers and ensuring the integration process in a smooth and effective manner. It may be added that no other bank in the nationalized bank group has a track-record of so many mergers. This has improved the franchise value of the Bank, particularly, in the relatively underrepresented Kerala region. In order to meet future capital requirements on account of implementation of Basel II norms, in March 2005, the Bank came out with Follow-on Public Offer (FPO) through the book building process, reducing the shareholding of Government of India to 57.8 per cent.
Punjab National Bank with 4997 domestic offices including 46 Extension Counters has the largest network amongst the nationalized banks i.e. next only to SBI. The bank has a strong franchise value and provides a host of financial products and services, both to the retail customer and corporate business. It has continued to fulfill its social responsibilities and made significant progress in adoption of technology, keeping with its objective of transforming itself into a techno-savvy Bank.
During 2008-09, the Bank achieved the landmark of becoming the largest Nationalized Bank to bring all branches/extension counters into Core Banking Solution (CBS). The strong franchise enjoyed by the Bank, combined with its technological capabilities provides the Bank competitive advantages.
The Bank also continues to discharge its social obligations and addresses environmental concerns with added vigour, which include free medical camps, distribute artificial limbs, tree plantation and blood donation camps, besides donations to Hospitals, Schools etc. The Bank supports various societies, charitable institutions and NGO /organizations working for the benefit of downtrodden, weaker sections of society, orphans, underprivileged, spastics, handicapped, mentally retarded children, women in shelter homes, etc. The Bank also contributes for fighting diseases like diabetes, tuberculosis, AIDS, leprosy etc. Donations are also extended for purchase of water coolers, ambulances and building infrastructure facilities at hospitals/schools.
PNB Before Independence
Lalaji was keenly concerned with the fact that though Indian capital was being used to run English Banks and companies, the profits went entirely to the British, while Indians had to contend themselves with a small interest on their capital. He echoed this sentiment in one of his writing while concurring with Rai Mul Raj of Arya Samaj who had long cherished the idea that Indians should have a National Bank of their own. At the instance of Rai Mul Raj, Lala Lajpat Rai sent a circular to selected friends insisting on an Indian joint stock Bank as the first step in constructive Swadeshi and the response was satisfactory.
After filing and registering the Memorandum and Articles of Association on 19 May, 1894, the bank was incorporated under Act VI of the 1882 Indian Companies Act with the authorized capital of Rs.200000 divided into shares of Rs.100 each. The prospectus of the bank was published in the Tribune, and the Urdu Akhbar-e-Am and Paisa Akhbar. On 23rd May, 1894, the founders met at the Lahore residence of Sardar Dyal Singh Majithia, the first Chairman of PNB, and resolved to go ahead with the scheme. They decided to hire a house in the famous Anarkali Bazar of Lahore opposite the post office and near well known stores of Rama Brothers.
On 12th April 1895, the bank opened for business, a day before the great Punjabi festival of Baishakhi celebrating the wheat harvest. The essence of the Bank’s culture was clear at this first meeting itself. The fourteen original shareholders and seven directors took only a modest number of shares; the control of the bank was to lie with the large, dispersed shareholding, a purely professional approach that was as uncommon then as it is today.
The Punjab National Bank emerged in the late 19th century. Inheriting the traditional of ancient trade and banking and influenced by the impact of modern British bank and the resurgence of the new Punjab where one of the ideal of the new elite was to start their own modern bank professionally run with Indian capital and management, wide public participation and no personal control or ownership. Rai Mul Raj of Arya Samaj specially had long cherished that Indian should have a national bank of their own. He was keenly concerned with the fact that through Indian capital was being used to run English banks and companies. The profit went entirely to the British, whilst Indian had a contend themselves with a small interest of their capital.
The control of the bank was to lie with large dispersed shareholding under the joint stock system with limited liability. The Director presented their account and report for the period from 12th May 1895 to December 1895 as shown in Table 1. The total deposit rose to 457988 on 31st December 1896 and to Rs 727447 on December 13 1897 from Rs 165337, in 31st December 1895 and paid up capital of Rs 41500 on 31st December 1895 rose to Rs 76960 on 31st December 1896 and to Rs 109495 in 1897. Net profit Rs 1555 for the year ending December 1895 rose to Rs 5314 in 1896 and to Rs 15536 in December 31st, 1897.
Paid up capital Rs.
Net profit Rs.
31st Dec, 1895 (8 ½ months
31st Dec. , 1896
31st Dec. , 1897
Sources: Tandon Parkash, Banking century, Penguin book, 1989 p-155
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