Mumbai: Punjab National Bank (PNB), a leading Indian public sector bank, has seen a steady rise in the proportion of retail assets to total assets.

The bank has been focussing on increasing its retail assets; it has increased from 5.9 per cent in FY01 to 13.2 per cent in FY02 and further to 16.3 per cent in FY03. The delinquency of the retail credit is lower in comparison to that of corporate books.

Also, the yields on the retail book are much higher. "PNB will be able to deploy more funds towards retail assets which will aid in improving yields on advances and further aid in mitigating the inability to reduce cost the of deposit and at best help to maintain spreads," says a Khandwala Securities report.

The bank's focus on garnering retail assets will further aid it in increasing its market share. PNB has been focusing on garnering low-cost funds and this, coupled with the re-pricing of its liabilities portfolio, has helped in reducing its cost of deposit over the last couple of years.

Over the last couple of years, growth in low-cost funds has outstripped the growth in term deposits. The absence of a strong technology infrastructure has been one of PNB's main challenges. The bank has now begun to implement a technology plan that it believes should help it plug the gaps on the technology front, the report says.

It is setting up a centralised banking solution which is provided by Infosys that will enable the bank to have a centralised database, branch connectivity, consolidated MIS and channel customer and product-wise profitability. The bank has networked about 200 of its 3,857 branches in FY03 and plans a further 1,500-2,000 branches by FY05. This will cover almost 80 per cent of the bank's total business.

"We believe technology is playing a very critical role in shaping the profitability and growth of banks," the report says. PNB has a tie-up with Oriental Bank of Commerce, Indian Bank, UTI Bank and Global Trust Bank to share their ATMs spread across India. PNB has also decided to act against defaulters.

Sometime back the bank took over Bittu Garments and Remax Fun World, Ludhiana. The companies owed over Rs 2.8 million to the bank. The bank seized immovable properties of seven defaulting companies and issued notices to 234 units involving Rs 249 million. Of these, 92 have turned up for settlement of dues. The bank later recovered Rs 41 million from 67 units.

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