Lucknow: After creating a stir among the builders of the Noida extension, it was the turn of the banks which after looking at the ongoing dispute have stopped loan approval and loan disbursement. The realty sector of banking industry has taken these measures till the controversy settles down.

According to Punjab National Bank (PNB) Chairman and Managing Director KR Kamath, the realty sector of banks has always been sensitive as the real estate sector often faces the conflict of ownership.

Kamath said, “The actual price of land is hard to guess hence there is a tremendous scope of dispute. However, the banks would continue to extend loans to the real estate sector.” In capacity of the head of the bank, he said, we generally avoid any transaction where things are not clear.

Kamat, who was here on Saturday to attend a meeting of Indian Banks' Association, admitted that the present scenario is not favourable for the banking sector. The RBI’s move to hike the interest rates to reduce the inflationary pressure on the economy has affected loan rates eventually affecting creditworthiness of the banks.

Kamat informed that in the first quarter of the last financial year, the PNB had a net profit of 30 percent but the same in the first quarter of this fiscal was restricted at merely 23.4 percent. Besides, the bank is also witnessing reduction in the proposals for loan.

Unlike the last year which recorded an average of 25 to 30 percent increase in the current and savings accounts (CASA) deposits, the same have reduced to 16 to 17 percent. In the wake of decrease in the CASA deposits, he said a campaign would be launched to spread awareness for opening more such accounts. The campaign will last two months.

With this campaign, the bank is also aiming to increase its saving deposit amount to Rs 1 lakh crore which has been restricted to Rs 94,000 crore.

Further, Kamath said the PNB has opened over 350 branches in the country and has installed 650 new ATMs in the present financial year.

(JPN/ Bureau)