The Hindu Business Line : PNB to go slow on loans for real estate

In a departure from its aggressive stance of last year, Punjab National Bank (PNB) has decided to go slow on providing credit for real estate development during the current fiscal.

It will, however, continue to encourage individual housing finance as part of its retail thrust.

Mr K. Raghuraman, Executive Director, told Business Line: "We are going to be less aggressive on exposure to land development projects this fiscal. But there is no ban on individual housing finance. We have even sharpened our delivery mechanism so that the growth in retail is much better this fiscal."

He added that the desire to go by the Reserve Bank of India (RBI) caution to go slow on real estate and the fact that PNB has almost reached its internal exposure limits to real estate has prompted the decision.PNB has segmented its exposure to real estate into five different categories, including hospitality, housing, land development, and malls.

On whether the bank would go in for any upward adjustment in the benchmark prime lending rate (PLR) in the next few months in the wake of hardening interest rates, Mr Raghuraman replied in the negative.

"I don't think we will. We are not thinking on those lines." PNB had last revised its rate (to 11.25 per cent) in May this year. "While there is no upward revision in the benchmark PLR, there is little adjustment in the sub-PLR. Wherever we have been giving sub-PLR, there has been modification in interest rates." As on June 30 this year, the bank has recorded 16.5 per cent year-on-year growth in deposits and 39 per cent year-on-year growth in advances.