NEWS & ADVICE : FIXED DEPOSITS
PNB cuts its PLR to 12.5%
By Neelima Shankar
Nov 28, 2008
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State-run, Punjab National Bank (PNB) has declared yet another cut in its benchmark prime lending rate (BPLR). In its board meeting held on November 26th, PNB has announced a 100 basis cut in the BPLR from 13.5% to 12.5%.

Earlier on October 31st, PNB had cut the PLR by 50 basis points. "Since interest rates have moved southward, we have decided to cut rates. Quality of assets is crucial and we want to send a message to good borrowers," said K C Chakrabarty, Chairman and Managing Director of the bank.

At the same time, the bank has also decided to reduce its deposit rate from 10.5% to 9.5% for deposits of one year to less than three years. Similarly interest rates in deposits with maturity of 180 days and above have been reduced by 25 to 100 basis points. The bank has taken the move in response to the recent measures taken by the RBI. This move may even prompt other banks to take a similar step. Chairman of Indian Banks Association, T S Narayanasami said private banks, which have so far not lowered lending rates, are expected to do so in the coming days.

An executive from HDFC Bank said that his bank is likely to review rates at the asset-liability committee meeting to be held next week. "It appears that the lending and deposit rates may follow a downward trend. We expect a decision soon," added the executive.

United Bank of India has declared 50 basis points cut in its deposit rates with effect from December 1st. "We have to take a call on lending rates. If other banks lower their rates, we will follow suit," said S C Gupta, Chairman & Managing Director of the bank.

Union Bank of India has already reduced the lending rates and for now they plan to keep the rates unchanged as the deposit rates remain high. Executive Director of Union Bank, T Y Prabhu said "During the same time last year, deposit rates were 150 basis points lower than the current rate. Unless deposit rates fall, there is little chance of a review in PLR."

Earlier when the PLR cut series started by the banks, PNB was the first to announce a reduction in its PLR. This is a second round of cut by the bank which is applicable from December 1st.

 


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