PNB wants to lower deposit, credit targets

Faced with a slowdown in credit and deposit growth in the first six months of 2007-08, many public sector banks like Punjab National Bank may soon write to the government to lower the annual deposit and credit growth targets.

"We will soon write to the government for downward revision of deposit and credit targets for 2007-08," K C Chakrabarty, chairman & managing director, PNB, said.

Chakrabarty said 16-17% growth in deposit and credit growth will be reasonable target for the entire fiscal. In the first six months, the bank has registered only 7-8% growth in fresh credit and deposits.

State-owned banks in consultation with government, fix deposit and credit growth targets for the entire fiscal in the beginning of every financial year. The deposit and credit growth targets of PNB are 24% and 25% respectively for 2007-08, sources said.

Monetary tightening by Reserve Bank has led to slackening of credit demand in all segments of credit including corporate sector.

Chakrabarty said interest rates are stable at the moment, but all major banks need to curtail deposit rates, which are still high. "Deposit rates are still high and it cannot come down if major players do not reduce rates," he added.

PNB has already reduced peak deposit rates from 9.5% to 8.75%, he added.