PNB to slash PLR by 50 bps to 11.5%

Written by feBureau | New Delhi | Updated: Jan 31 2009, 06:07am hrs
Punjab National Bank (PNB) on Friday decided to slash benchmark prime lending rate (BPLR) by 50 basis points to 11.5% with effect from February 1 ahead of public sector banks meeting with external affairs and finance minister Pranab Mukherjee on Monday. The bank has also decided to bring its deposit rates down by 50-100 basis points.

Two more nationalised banks, Canara Bank and Oriental Bank of Commerce, also indicated they would reduce interest rates soon. Canara Bank chairman and managing director (CMD) AC Mahajan said, I am also of the view that there is scope for further round of BPLR cuts. But, before doing it, we will have to see our cost of fund coming down. Our ALCO will be meeting soon to take a call on it and based on the recommendations made by the ALCO, my banks board will take a decision on the topic. Oriental Bank of Commerce CMD Alok K Misra said, I think there is a bias for bringing it down...We see through Reserve Bank of India what signals are coming and in line with the peer banks. OBCs benchmark lending rate is 12.5%.

The announcements have come three days after RBI kept all key rates unchanged in its third quarter review of the monetary policy on January 27. The central bank had then said that banks have a significant room to cut interest rates further.

With the revision in prime lending rate, interest rates on home, car, education and personal loans would come down by up to 50 basis points. The fixed-rate housing loan would range from 9.25% to 11%, depending upon tenor and amount. The revised floating rate housing loans would be from 9% to 10.25%, PNB CMD K C Chakrabarty said. The revised interest rates on floating housing loan rate will be applicable both for existing and new accounts, he added.