Interesting And Lesser-Known Facts About Punjab National Bank

One of the oldest Public sector banks in India, Punjab National Bank is also one of the largest. Over the last 120 years, PNB has established itself as a leading bank, catering to over 80 million customers and meeting their financial needs. With 7000 branches and 10681 ATMs installed across 764 cities, it also has presence internationally in 10 countries.

Here are some interesting facts about Punjab National Bank that you would not be aware of and one which you would be!

History of the Bank

Punjab witnessed rapid development in the late 19th century that saw the emergence of a new educated class, which had an ambition of having a Swadeshi Bank. The idea was first mooted by Rai Mool Raj, who had for long desired that Indians should have their own National Bank. With the objective of creating a bank, that would further the economic intertest of India, Punjab National Bank was registered on 19 May 1894 under the Indian Companies Act.

Founding Board of the Bank

The Founders of the bank were people from different parts of the country having diversified back grounds and believing in different faiths. The first Board of 7 Directors comprised of Sardar Dayal Singh Majithia, Kali Prosanna Roy, Lala Harikishan Lal, E C Jessawala, Lala Prabhu Dayal, Bakshi Jaishi Ram and Lala Dholan Dass. Lala Lajpat Rai was also associated with the management of the bank in its initial years.

Opening of its first branch

Punjab National Bank opened for business on April 12 1895, with its first branch in Lahore. Sardar Dayal Singh Majithia was its first Chairman and Lala Harkishan Lal its first secretary. Lala Lajpat Rai was the first to open an account in the bank.

No British funding or capital investment

Punjab National Bank has the unique distinction of being the first Indian bank which was started solely with capital from Indian investors and which is still functioning.

Bank Started its operations with a modest capital

The initial authorized capital of the bank was Rs 2 Lakhs, with a working capital of Rs 20,000. The total staff strength was 9 with the total monthly salary of Rs 320.

Expansion of the bank

After 5 years of its operation in Lahore, the Punjab National Bank opened its second branch in Rawalpindi in the year 1900. This was followed with opening of branches in Karachi and Peshawar.

Few steps that helped the bank a long way

Punjab National Bank distinguished itself from other banks by appointing auditors in 1895, even when it was not mandatory to do so. In 1944, bank introduced the “Teller” system, another first. It also started profit sharing bonus, provident fund and voluntary external audits as part of good management.

Surviving the big crash

In 1913, Indian banking industry was hit by a severe crisis. As many as 78 banks failed during this crunch, but Punjab National Bank endured it. The then Financial Commissioner of Punjab, Mr. J H Maynard praised PNB for its good management and public trust in the bank.

Shifting the head office to Independent India

Even before India’s partition, on 31 March 1947, Punjab National Bank decided to transfer its registered office to New Delhi. Lahore High Court granted the permission for the same on 20 June 1947. The new registered office of PNB was opened in Civil Line, New Delhi with Lala Yodh Raj as its Chairman.

Famous account holders of the Bank

Since its inception in 1895, PNB has served millions of people throughout the country. It has also had the privilege of handling accounts of great national leaders like Pt. Jawahar Lal Nehru, Pt. Gobind Ballabh Pant, Lal Bahadur Shastri, Rafi Ahmed Kidwai, Indira Gandhi and many more. The bank handled the Jalianwala Bagh Committee account too.

Rapid growth of PNB in Independent India

During the bank’s 123 years long history, seven banks have merged with PNB. In 1951, it acquired Bharat Bank Ltd and became the 2nd largest private sector bank in India. During its course to being nationalised, PNB saw its deposits grow from Rs. 43 crores in 1949 to Rs 355 crores in 1969. Its advances rose to 243 crores by July 1949, from a meagre 19 crores in 1949.

Becoming a Nationalized Bank

PNB was among the 13 major commercial banks that were Nationalized by the Government of India on 19th July 1969. The first ever and only merger of a Nationalised Bank with PNB happened when it acquired New Bank of India in 1993.

Established itself firmly as one of the premier banking institutions in India

With more than 5400 domestic offices, including Extension Counters, PNB has the largest network amongst the Nationalised Banks, next only to State Bank of India. In 2008-09, PNB got the distinction of becoming the largest Nationalised Bank to bring all its branches and extension counters into Core Banking Solutions, giving it a competitive edge.

Punjab National Bank Fraud case of 2018

A major scam was detected by PNB at one of its branches in Mumbai, involving illegal transfer of $1.8 billion or over Rs. 11,000 crore. Several fraudulent Letters of Undertaking (LoU) were issued by some senior bank officials to billionaire jeweler Nirav Modi’s firms since 2011, making the bank liable for the amount. Nirav Modi along with his wife, brother and uncle Mehul Choksi, have been charge sheeted by the Central Bureau of Investigation (CBI) for this fraud. Nirav and his family absconded in 2018, just days before news regarding the scam broke out. Former key PNB officials too have been charge sheeted in this case. Reserve Bank of India has now scrapped banking instruments like Letter of Undertaking (LoU) and Letter of Comfort (LoC).