At end of August 2019, overall credit growth in banking sector stood at 10.1% on a year-on-year basis.

The Punjab National Bank has started tying up with non-banking financial companies (NBFCs) for co-originating loans amounting to Rs 4,000 crore since the last two months and though the lender has not decided if it will link the deposit rates with the RBI repo rates, its retail loan rates will be based on repo rates from October 1, its Managing Director and CEO Sunil Mehta said on Monday.

"We have funded four such portfoilos aggregating Rs 4,000 crore in the past two months, and the bank is in the process of identifying more such portfolios," Mr Mehta told IANS.

The stress on NBFCs and HFCs is seen as a key reason for slowdown in the economy, as it has caused reduced credit flow to small businesses.

Asked if the PNB will link its deposits and lendings rates to RBI's repo rate as external benchmark linking from October 1, Mr Mehta said: "We have not linked them to the repo rates because sometimes it can create more volatility. We will deliberate issues and take a call."

Acting upon their commitment to review lending rates in the context of policy rate cuts, all PSBs effected weighted average rate cuts of 27 basis points till August and another 10 effected additional rate cuts ranging from 15 to 5 basis points this month.

Further, to enable automatic transmission of externally benchmarked rates, 15 PSBs have introduced repo-rate-linked loan products for housing and vehicles, consumer credit, cash credit limits and mortgage-based loans. Already, over 1.08 lakh repo-linked proposals, amounting to over Rs 40,000 crore, have been sanctioned. The remaining three PSBs will be introducing such products by 1 October.

At the end of August 2019, overall credit growth in the banking sector stood at 10.1 per cent on a year-on-year basis.

On the merger of PNB with Oriental Bank of Commerce and United Bank of India, with PNB as the anchor bank, Mr Mehta said: "Post the merger from April 1 next year, the bank's stregth in terms of assets is going to be rising. We have prepared the consolidated balancesheet of the three banks also. This combined balancesheet is giving a better picture than the standalone one.

"The government has given us adequate capital support. All these things will enable a stronger balancesheet. Globally, as we know there are large-sized banks. In India, we don't have a large size bank listed even in the global first 100 banks. So India needs large-sized banks and this amalgmation is a step in that direction."

Emerging from the Nirav Modi fraud shadow, PNB posted a net profit of Rs 1,019 crore for the June quarter against a loss of Rs 940 crore registered in the corresponding quarter of the previous fiscal.