PNB sees loan growth shrinking in next fiscal

With the financial downturn expected to stay next year as well, state-owned Punjab National Bank (PNB) today said that its credit growth could shrink to 20 per cent in FY10.

"We have been cautious (in lending) to over-leveraged sectors... We expect credit growth of 20 per cent 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 per cent in the current fiscal, Chakrabarty said.

Despite the adverse impact of the financial turmoil, credit growth in many government-owned banks has risen over the past one year, Chakrabarty said.

The country's third largest bank, however, will meet the requirements of growth-oriented segments though it will be cautious about over-leveraged sectors, Chakrabarty said.

"These are difficult times... But we will be lending to (meet) the productive requirements of clients," Chakrabarty said.

Noting that lending rates in the banking system "are not high" and are linked to the deposit rates of each bank, Chakrabarty said that PNB will look at possibilities of further reduction in its rates.