India's second largest public sector lender, Punjab National Bank (PNB) has announced to further cut the interest rates if the inflation eases.
PNB Chairman, K C Chakrabarty said, "If inflation comes down further, we will cut rate again."
"Last week, PNB cut its benchmark prime lending rate by 50 basis points to 11.5 percent, which is the lowest among public sector banks," he added.
For the week ended on January 24th, inflation measured by the wholesale price index eased to 5.07%. Monetary easing by RBI to control inflation that had touched double digits has in turn helped banks to reduce their lending rates. This easing trend has also encouraged the Central bank to slash the key policy rates.
Since October, RBI has been taking measures to boost liquidity and demand in the system. It has reduced the CRR by 400 basis points to 5% while the repo and reverse repo have been cut by 350 and 200 basis points to 5.5% and 4% respectively. However in the latest quarterly review of credit policy, RBI has kept the policy rates unchanged.
With the latest reduction in its PLR, PNB has also slashed all the lending rates linked to PLR. Interest rates on home, car, education as well as personal loans have been cut by up to 50 basis points. The bank says that its home loan rates are competitive and they are not planning to match them the SBI's rates. "Though SBI is our big brother we have no intention to match eight percent home loan rate scheme," said Chakrabarty.
PNB has also announced the implementation of core banking solution (CBS) across its network. Chakrabarty informed that the project has been completed four months before the scheduled date. He said that the centralization of the banking operation enables to face the challenges in the financial sector.
Chakrabarty said that the bank is also planning to expand its overseas presence by setting up a wholly owned subsidiary in line with its branch in Canada.