Ashok Chandra, the chief executive of Punjab National Bank, told The Hindu BusinessLine that seasonal demand is projected to increase quarterly lending by up to two percentage points. Chandra indicated that this surge is most visible in core retail categories, such as housing, mortgages, vehicles, and education, where he anticipates growth rates will rise from the current 16.3 percent to approximately 18 percent. He also forecast that the micro, small and medium enterprise segment will expand by 21 to 22 percent, while the agriculture division is expected to grow between 18 and 19 percent, contributing to an overall lending growth rate of 14 to 15 percent for the period.
Regarding interest rate dynamics, the executive explained that the institution passes monetary policy adjustments to borrowers on the following business day. Following a recent series of rate reductions totaling 125 basis points, the bank expects a seven-basis-point improvement in margins from the latest rate hike. He noted that deposit rates have remained elevated, hovering above 7 percent for a year, despite the repo rate cuts, and the asset liability committee will determine future deposit rate adjustments after reviewing these factors.
Chandra highlighted that the bank has utilized its entire $2.7 billion in foreign currency non-resident inflows to retire expensive bulk liabilities and certificates of deposit. This strategy has resulted in a 10-basis-point increase in domestic interest margins and an eight-basis-point rise in global margins for the quarter. He stated that the institution is not currently active in the certificate of deposit or bulk liability markets, which has reduced interest outgo and improved profitability.
To further strengthen its liquidity position, the bank has initiated the process to raise approximately $1 billion through the medium-term note route. According to BusinessLine, the institution has completed roadshows and legal requirements, awaiting the appropriate market window. Additionally, the board has approved the issuance of 10,000 crore rupees in infrastructure bonds, contingent on favorable market interest rates. Chandra noted that with a certificate of deposit ratio of 75 percent, the bank maintains sufficient liquidity to support continued lending growth.