Punjab National Bank, the second largest public sector bank, has raised the interest rate on loans to commercial real estate and large non-deposit taking non-banking finance companies (NBFCs) by 50 basis points to 16.25%.

According to a release issued by the bank to the BSE today, the board, at its meeting on March 29, decided to increase the spread on loans to the identified sectors namely, commercial real estate and non-deposit taking systemically important NBFCs (other than asset finance companies), from 3.5% over the benchmark prime lending rate to 4%. The bank had earlier raised its BPLR to 12.25% 11.75%.

The move comes on the back of Reserve Bank of India's move to double the provisioning requirement on standard loans to real estate, excluding residential housing loans, to 2% from 1% in its January review.

The apex bank had also raised the provisioning requirement for banks' exposure in the standard loans category to non-deposit taking systemically important NBFCs to 2% from 0.4% earlier. The risk weight for banks’ exposure to such NBFCs was also raised to 125% from the existing 100%. Provisioning requirements and risk weights for banks’ exposures to asset finance companies, however, were left unchanged.
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