PNB Utkarsh 2027: Credit Risk Management, Inspection & Audit, and Regulatory Policies

Comprehensive vocabulary flashcards covering key policies, regulatory limits, definitions, and operational frameworks from the PNB Utkarsh 2027 compendium.

Substantial Exposure

The sum total of credit and investment exposures assumed in respect of 'Large Borrowers' whose exposure values equal or exceed $10\%$ of the Bank's Tier-I Capital, subject to an aggregate ceiling of $800\%$ of Tier-I Capital.

Large Borrower

A counterparty or group of connected counterparties where the sum of all exposure values of the bank is equal to or above $10\%$ of the Bank's Tier-I Capital.

Ultra Large Borrower

Any borrower having an Aggregate Sanctioned Credit Limit (ASCL) of fund-based credit limits sanctioned or outstanding (whichever is higher) across the banking system of more than $₹25,000\text{ crore}$ at any time during a financial year.

Unsecured Exposure

An exposure (funded and non-funded) where the realizable value of tangible security is not more than $10\%$, ab-initio, of the outstanding exposure, including top-up loans against depreciating movable assets such as vehicles.

Group of Connected Counterparties

Two or more natural or legal persons connected through a control relationship (e.g., holding more than $20\%$ of voting rights or management control) or through economic interdependence such that financial distress in one creates repayment difficulties for the other.

Income-Producing Real Estate (IPRE)

A method of providing debt funding to real estate assets (such as office buildings to let, retail spaces, warehouses, and hotels) where repayment and recovery depend primarily on the cash flows generated by the underlying property, predominantly through leases, rentals, or asset sale.

Factoring on "With Recourse" Basis

A domestic factoring arrangement where the seller assigns trade receivables to the bank for prepayment up to $100\%$; upon default by the buyer on the due date, the bank approaches the seller for recovery, treating the exposure as secured on the seller.

Factoring on "Without Recourse" Basis

A factoring service where the seller assigns trade receivables to the bank; if the buyer defaults on the due date, the bank has no recourse to the seller and pursues recovery exclusively from the buyer, with the exposure treated as unsecured on the debtor.

Three Lines of Defence Model

A comprehensive risk governance framework delineating Business Units/Risk Takers as the 1st line (managing day-to-day risk), Risk & Compliance Functions as the 2nd line (oversight and compliance testing), and Internal Audit (IAD) as the 3rd line (independent assurance and review).

Risk Management Guiding Principles Pyramid

A hierarchical risk structure rooted in a Strong Risk Culture, layered upwards through Risk Reporting, Risk Management Approach, Risk Governance, and Risk Appetite, governed at the top by the Risk Management Policy.

Techno-Economic Viability (TEV) Study

An appraisal of the technological parameters and financial viability of a capital project, required for fresh projects or diversifications with project costs above $₹20.00\text{ crore}$ and existing expansions above $₹40.00\text{ crore}$.

PNB Cash Flow Discounting

A lending policy financing assured future receivables due from reputed entities under a formal contract and tripartite agreement, allowing up to $80\%$ financing of the discounted present value of net future cash flows for a maximum tenor of 7 years.

Green Renewal

An expedited renewal procedure for standard working capital credit facilities up to $₹25.00\text{ crore}$ that satisfy strict criteria (no security/margin dilution, no management change, internal rating B2 and above), permissible for up to two consecutive renewals.

Default Loss Guarantee (DLG)

A contractual arrangement under digital lending where a third-party lending service provider or guarantor explicitly compensates the bank for credit losses due to default, capped at a maximum of $5\%$ of the underlying loan portfolio.

Cooling-Off / Look-Up Period

A regulatory time window (stipulated by the Bank as 3 to 15 days) allowing a borrower to exit a digital loan without penalty by repaying the principal and the proportionate Annual Percentage Rate (APR).

Standby Credit Facility (SBCF)

A contingent credit line sanctioned at the time of initial financial closure to fund anticipated or unforeseen cost overruns during the project's construction phase.

Gold Metal Loan (GML)

A credit mechanism under which nominated or designated banks extend working capital loans to jewellery manufacturers and exporters in physical gold metal, denominated in Indian Rupees based on gold market value.

Actual Date of Commencement of Commercial Operations (actual DCCO)

The formal date on which a project is commissioned for commercial operation and an official completion, provisional completion, or occupancy certificate is issued to the developer or promoter.

Microfinance Loan

A collateral-free loan granted to an individual or household whose annual household income (actual or projected) does not exceed $₹3,00,000$, with monthly debt repayment obligations capped at $50\%$ of net monthly household income.

Platform Workers

Gig workers whose work arrangements, assignments, and remuneration are mediated through online software applications or digital platforms.

Non-Platform Gig Workers

Casual wage workers and own-account workers operating in conventional sectors on a part-time or full-time basis outside traditional employer-employee contracts without reliance on digital platform applications.

Capital Conservation Buffer (CCB)

A Basel III mandatory capital reserve of $2.5\%$ of Risk-Weighted Assets (RWAs) maintained exclusively in Common Equity Tier 1 (CET-1) above the minimum regulatory total capital requirement of $9\%$.

Countercyclical Capital Buffer (CCCB)

A macroprudential Basel III buffer varying between $0\%$ and $2.5\%$ of RWAs in CET-1, triggered by the credit-to-GDP gap (activated at $3\%$ points and reaching maximum at $15\%$ points) to mitigate systemic cyclical credit risk.

Liquidity Coverage Ratio (LCR)

A short-term liquidity standard requiring banks to hold sufficient unencumbered High-Quality Liquid Assets (HQLA) to withstand a severe $30\text{-day}$ stress liquidity outflow scenario, mandated at a minimum of $100\%$.

Net Stable Funding Ratio (NSFR)

A structural long-term liquidity metric that promotes resilience by requiring banks to maintain an Available Stable Funding (ASF) amount at least equal to their Required Stable Funding (RSF) over a one-year time horizon ($\ge 100\%$).

Leverage Ratio

A non-risk-weighted leverage metric calculated as Tier-1 Capital divided by the Bank's total on- and off-balance sheet exposures, prescribed at a regulatory minimum of $3.50\%$ for commercial banks and $4.00\%$ for D-SIBs.

Waterfall Mechanism

The priority order of distributing cash flows in an InvIT Master Escrow Account: SPV debt servicing and O&M expenses first, followed sequentially by InvIT Debt Servicing, DSRA replenishment, Major Maintenance/Shortfalls, and residual surplus to unit holders.

Cash Trap Mechanism

A contractual control mechanism in InvIT project financing invoked when the actual Gross Debt Service Coverage Ratio (DSCR) drops below the sanctioned minimum, impounding all surplus escrow funds until performance normalizes.

Minimum Holding Period (MHP)

The mandatory holding duration required before a lender can transfer a loan exposure (typically 3 months for loans with tenors up to 2 years, and 6 months for loans over 2 years), measured from CERSAI registration.

Minimum Retention Requirement (MRR)

The statutory minimum percentage of individual loan exposure or economic interest (at least $10\%$) that an originating institution must retain on its own balance sheet throughout the co-lending or securitization tenure.

SPACE (System and Product Approval Committee of Executives)

A specialized executive committee chaired by the Group Chief Risk Officer (GCRO) that evaluates, vets, and recommends approvals for all new banking products, activities, processes, IT systems, and significant modifications.

Risk Appetite Statement (RAS)

A Board-approved governance framework translating institutional risk philosophy into quantifiable metrics, defining Risk Capacity, Risk Threshold Limits, Risk Appetite, and Risk Monitoring Limits across the bank.

Conduct Risk

The risk that actions, decisions, or behaviors of bank employees or management lead to detrimental outcomes for customers, colleagues, financial markets, or other stakeholders.

Climate Resilience

The institutional and operational capacity of the Bank to adjust, adapt, withstand, and capitalize on opportunities associated with physical and transition impacts of climate change.

Greenwashing

The misleading or deceptive practice of marketing or presenting banking products, projects, or services as environmentally sustainable when they do not fulfill established regulatory green criteria.

DAKSH

The Reserve Bank of India’s web-based advanced SupTech workflow platform designed to track regulatory returns, handle complaints, inspect supervisory compliance, and monitor Supervised Entities (SEs).

Priority Sector Lending Certificates (PSLC)

Tradable instruments traded on the RBI e-Kuber portal in lots of $₹25\text{ lakh}$ that allow banks to address priority sector shortfalls without the transfer of underlying loans or credit risk.

Repo Linked Lending Rate (RLLR)

An external benchmark interest rate applied to retail and MSME floating rate loans, determined as the sum of $\text{Repo Rate} + \text{Markup} + \text{Business Strategic Premium (BSP)}$.

PNB SAJAG 2.0

An automated Early Warning Signal (EWS) monitoring system tracking all loan accounts with exposures exceeding $₹20\text{ lakh}$ using 132 risk parameters to compute dynamic risk scores between 0 (least risky) and 100 (most risky).

Open Term Loan

A pre-approved commercial term loan facility offering multiple disbursements across 12 months (sized up to $20\%$ of total limit, between $₹10\text{ lakh}$ and $₹10\text{ crore}$) for Capex, debt replacement, or business expansion.