NEWS & ADVICE : FIXED DEPOSITS
YES Bank reduces the PLR to 16.5%
By Neelima Shankar
Dec 9, 2008
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Immediately after the RBI cut its short term lending rates on December 6th, private lender YES bank announced a 50 basis points reduction in its prime lending rate (PLR) from 17% to 16.5% with effect from December 8th.

Managing Director and CEO of the bank, Rana Kapoor said on Saturday, "After our asset-liability committee meeting today, we have decided to reduce our PLR by 0.50 percent."

YES Bank is the first bank to announce a PLR cut after the RBI cut both its repo and reverse repo rates by 100 basis points. This step is expected to be followed by more bankers in the industry.

However Chairman and Managing Director of Punjab National Bank (PNB), K C Chakrabarty said that those banks that have not reduced their PLR until now will go for a cut at present.

PNB has the lowest PLR in the industry at 12.5% and plans to review its asset-liability situation in the next week in order to check the scope for further cuts in its lending rates. The move is initiated by the latest measures announced by RBI.

ICICI Bank Joint Managing Director Chanda Kochhar said that the RBI package has sent a signal for the banks to follow the southward movement of lending rates. "Repo rate cut immediately means cut in deposit rates. I think that we have to give it some cooling off period and then see how the rate moves," said Kochhar.

Several public sector banks have already announced a cut in their PLR. Kolkata-based public lender UCO Bank said that it is planning to reduce both its deposit and lending rates by 50 basis points in January, 2009.

Chairman and Managing Director of UCO Bank, S K Goel said, "We are also planning to cut deposit and prime lending rate by 50 basis points from the next month."

Most banks in the industry are likely to take similar moves and cut rates following the measures declared by RBI.

Recently YES Bank's non-executive chairman, Ashok Kapur has been killed in the terrorist attack carried in Mumbai.

 


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