The country`s second-largest public sector bank Punjab National Bank(PNB), is planning to cut exposure to personal loans including home finance, to bridge the gap between higher credit offtake and lower deposits, reports agency sources.

`The bank is concerned over widening gap between resource mobilisation and credit expansion and will soon take decisions on curtailing credit exposure by reducing personal loans,` PNB chief general manager, U S Bhargava said. The bank`s asset liability committee (ALCO), will meet later this week to decide on the issue, he added.

PNB`s, credit exposure is growing at 28% as against a growth of 20-22% in resource mobilisation. The bank, earlier indicated an increase in the prime lending rate (PLR) by 25 to 50 basis points and interest rates on all types of personal loans, including housing loans.

At present, PNB charges a PLR of 12.25% and the interest rate on personal loans is between 12-13%.

A number of lenders such as ICICI Bank and HDFC Bank, raised PLR by 100 basis points, while Bank of Baroda increased the rates by 75 basis points.

The move is in effect to the Reserve Bank`s decision, to increase repurchase rate at which it lends to banks and the cash reserve ratio, the deposits to be kept by all banks with RBI, to check high credit growth and tame inflation in the economy.

Bhargava said that, while loans for the first house of a borrower will be kept under priority area, PNB will take steps to discourage buying a second or third house.