PNB earmarks ₹3,400 crore for IT, AI push amid rising cyber frauds

State-run Punjab National Bank has received board approval for its IT spending plan. ₹3,400 crore, covering investments in artificial intelligence, large-scale technology upgrades and digital innovation initiatives, its managing director and CEO Ashok Chandra said in an interview on Thursday.

The bank also plans to appoint an advisor for AI initiatives and develop a tailored strategy to combat emerging cyber fraud risks, Chandra added.

“The bank plans to shortly issue a request for proposal (RFP) to hire a consultant for productive AI-led initiatives including data analytics, digital innovation, predictive analytics, customer service automation, cyber risk management and fraud monitoring systems,” he said.

Also Read | PNB Housing invests in emerging markets as banks corner senior loans

The move comes as banks grapple with increasingly sophisticated cyber fraud and digital scams, including emerging threats such as the Claude Mythos and AI-assisted phishing. In the last week of April, Union finance minister Nirmala Sitharaman met heads of public sector banks to discuss AI-related risks amid global concerns about Mythos and potential threats to financial data security.

“We have also created a new vertical called Strategic Innovation Lab. Under this initiative, we have identified over 200 young engineering professionals within the bank, including talent from IITs and NITs. They will be trained and brought into the head office innovation set-up to strengthen our technology and AI capabilities,” said Chandra.

4th quarter performance

Talking about the difficulties in Casa (current account and savings account) mobilization, he said the bank’s domestic deposits increased by 9.1% compared to last year. While Casa deposits increased by 6.2%, individual deposits of savings banks, which are considered core deposits, increased by 9.2%.

“Last year, we completely revamped our Casa and savings bank schemes. Under these revamped products, we have activated more than 47 lakh (4.7 million) quality accounts, which is approx. ₹22,000 crore savings bank deposits,” he added.

Also Read | Indian IT bigwigs admit concerns over AI-led deflation

On margins, he said, pressure was seen in most public sector banks in the March quarter. “The main reason for this was that repo rate cuts were transmitted faster on the lending side and deposit rates did not fall at the same pace,” he said.

“Our expectation was that deposit rates would soften in the 4th quarter, which would offset the impact of low loan rates. However, this did not happen in this quarter and therefore margins were affected throughout the banking sector,” he said.

The bank reported net profit so far in Q2FY26: ₹5,225 crore, up 14% ₹4,567 crore a year ago. Net interest income (NII) decreased by 3.5% ₹10,380 crore ₹10,756 crore. Domestic net interest margin (NIM) stood at 2.61% in the quarter compared to 2.96% in the same quarter of the previous year.

ECLGS 5.0

On the government’s latest announcement on Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, Chandra said the support has come at the right time. “MSMEs (micro, small and medium enterprises) are likely to face some pressure, especially from the second quarter onwards, due to the evolving global situation,” he added.

Also Read | A look at the AI-driven future of cybersecurity

The bank’s MSME advances increased by 19.9% annually ₹1,95,027 crore.

He also added that wherever accounts are up and running and businesses can stay afloat, they need additional support and liquidity. With credit guarantee now available, banks will be in a position to extend this support.

“We have not seen any major stress on accounts linked to Middle Eastern countries at the moment. We have held two webinars with exporters bound to these regions. Discussions are ongoing with the Government of India on the opportunities and challenges arising from the situation. Whatever support is required, companies and banks will work together to address this,” he said.