Country's second largest public lender, Punjab National Bank (PNB) is all set to open its baking arm in Bhutan. The bank is likely to set up a joint venture, Druk PNB Bank Ltd with the Bhutanese Promoters for which it has been accorded in-principle approval by the Royal Monetary Authority of Bhutan.

The joint venture company would start its operations in the January-March quarter of 2009 with a paid-up capital of Rs 30 crore. The bank has earlier received an approval from the Reserve Bank of India to sign a MoU with the Bhutanese counterpart.

The bank is also likely to launch its credit card business in the month of January and is believed to be on its final stages of agreement with Visa to avail the services.

Meanwhile PNB expects its loans to grow at 28% to 29% for the current fiscal. The bank says that it has witnessed strong demand during the year and also sees its bad loans under ‘manageable levels' in the coming months.

PNB's Chairman and Managing Director, K C Chakrabarty said, "We have seen a good demand for loans and it (the credit growth) should be in the range of 28-29 percent for the fiscal (2008-09)."

The non-performing assets (NPAs) of the bank will also remain under control despite some defaults are expected in its risky asset portfolios in the second half of next year, he said. Presently the bank's net NPAs stand at below 0.5% and gross NPAs are around 2.5%.

"We do not expect any major increase in our bad loans from any specific portfolios...
NPAs are not sector specific and depend upon the ability of the customer in repaying the loan... It (NPA) is under controllable limits," said Chakrabarty.

The public lender maintains a dominant position in North India and is confident bank about maintaining a net interest margin of 3.4% to 3.5% in the current fiscal.