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Punjab National Bank to reduce personal loan exposure news
10 April 2007

Mumbai: Punjab National Bank, the country''s second-biggest public sector lender, will reduce exposure to personal loans, including home finance, as it bids to bridge the gap between high credit off take and low deposit growth.

"The bank is concerned over widening gap between resource mobilisation and credit expansion and will soon take decisions on curtailing credit exposure by reducing personal loans," reports quoting PNB chief general manager U S Bhargava said.

The bank''s asset liability committee (ALCO) will meet later this week to decide on the issue, he added.

PNB''s, credit exposure is growing at 28 per cent as against a deposit growth rate of 20-22 per cent. The bank, earlier had indicated an increase in the prime lending rate (PLR) by 25 to 50 basis points and interest rates on all types of personal loans, including housing loans.

PNB has pegged its prime-lending rate at 12.25 per cent while the interest rate on personal loans is 12-13 per cent.

A number of lenders such as ICICI Bank and HDFC Bank, raised PLR by 100 basis points, while Bank of Baroda increased the rates by 75 basis points.

The move is in line with the Reserve Bank`s policy of checking high credit growth and taming inflation in the economy.

Bhargava said that, while loans for the first house of a borrower will be kept under priority area, PNB would take steps to discourage buying a second or third house.

The shares of the bank closed up Rs 15.8 or 3.72 per cent at Rs 440.45 on the BSE. The total volume of shares traded was 192,253.

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Punjab National Bank to reduce personal loan exposure