Mumbai: With the impact of the financial downturn expected to reflect in India next year as well, state-owned Punjab National Bank (PNB) today said that its credit growth could shrink to 20% in FY 10.
“We have been cautious to lend to over-leveraged sectors...we expect a credit growth of 20% in the next fiscal,” PNB Chairman and Managing Director, K C Chakrabarty, told reporters here today.
The lender has seen its credit portfolio growing at as high as 39% in the current fiscal, Chakrabarty said.
Despite the adverse impact of the financial turmoil, credit growth of many Government-owned banks has shown a rise over the past one year, Chakrabarty said.
The country’s third largest bank, however, will meet the productive requirements of growth-oriented sectors though it will be cautious about slippages in over-leveraged sectors, Chakrabarty said.
“These are difficult times...But we will be lending to the productive requirements of clients,” Chakrabarty said.
Noting that lending rates in the banking system “are not high” and is linked to the deposit rates of each bank, Chakrabarty said that PNB will examine possibilities of further reduction in its rates moving ahead.
Cost of funds for banks are largely dependent upon the deposit rates they pay rather than the liquidity conditions in the banking system, he said.
PNB was also planning to ramp up its financial inclusion efforts in the period ahead, Chakrabarty said.
The lender has targeted to increase its no-frills accounts to 10 crore from the current 48 lakh in the next five years, he added.