Public lender, Punjab National Bank (PNB) aims a credit growth of 20% for the next fiscal even though the coming year is going to be full of challenges.

Although the year ahead is expected to be tough in the light of global financial crunch and falling demand, yet the bank anticipates 20% credit growth. As on December 2008, PNB recorded 39.3% growth in its credit.

Meanwhile the bank is also going to adopt a cautious approach to lending. The bank's Chairman and Managing Director, K C Chakrabarty said, "There is also the risk of a rise in bad loans and, hence, the bank will be more cautious in extending loans in the next financial year. We will focus on ensuring more productive use of credit."

"Globally, credit will be scarce. Money flowing into India will also come down. The same amount of credit should be more productive," he added.

Further Chakrabarty said that the bank will not extend credit to over-leveraged and over-adventurous borrowers.

Talking about the cut in lending rates, he said that there is always a scope for improving and cutting costs. "The bank will examine if it can reduce its benchmark prime lending rate further, if the Reserve Bank of India cuts interest rates further," he said.

In February, PNB had cut its benchmark prime lending rate (BPLR) by 50 basis points to 11.5%. This is the lowest BPLR prevailing in the industry.

Meanwhile Chakrabarty emphasized the need for low-cost technology banking products that can be affordable to the poor. He also said that the bank would not slow down its spending on technology.

He said that as the foreign market is bleak, these companies should design products which suit the domestic banking and financial institutions.