The pressure on Net Interest Margin (NIM) is expected to ease, probably from the third quarter of the current financial year, after the reduction of policy rates by the Reserve Bank of India, according to Ashok Chandra, Managing Director & CEO, Punjab National Bank.

In an interaction with newspersons after an outreach programme conducted by the bank for Sell Help Groups and MSMEs here on Wednesday, Chandra said he was expecting NIM to hover around 2.8 to 2.9 per cent in the current financial year. For FY25, PNB pegged NIM at 2.93 per cent.

The cost of funds is expected to come down as most banks are now re-pricing deposits as the RBI cut the repo rate by 50 basis points in the monetary policy review last week. 

PNB will also review its deposit rates in the wake of repo rate cut and its impact on liquidity in the market in the upcoming Asset-Liability Committee (ALCO) meeting shortly, said the PNB chief.

“The 100-bps cut in the Cash Reserve Ratio (CRR) by the RBI will also give us about ₹15,000 crore, which can be used for expanding lending,” he added. 

Focus on RAM

PNB will also step up its focus on lending to RAM (retail, agriculture and MSMEs) sectors. “Our growth target in RAM is to increase it from 53 per cent of the loan book in FY25 to 58 per cent in the current financial year. To achieve this, we have been taking a slew of measures to increase RAM lending through outreach programmes,” said Chandra.

 In FY26, the bank’s lending to the bank was at around ₹6 lakh crore, amounting to about 56 per cent of the loan book. PNB has also started digital lending facility for MSMES.

Chandra said he was “bullish” on corporate credit offtake in the current financial year with lending rates heading south. “Last year, we had ₹1.35 lakh crore sanctions for corporates. Renewable energy, power, steel and infra, including ports, are seeing higher traction,” he said. 

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Published on June 11, 2025