PNB to slash BPLR, deposit rates by 100 bps

Prior to the announcement of Reserve Bank of India (RBI) on the current interest and deposit rates, the Punjab National Bank (PNB) Wednesday said to cut Benchmark Prime Lending Rate (BPLR) by 100 basis point (1%) effective from December 01, 2008.

Benchmark Prime Lending Rate (BPLR) is the rate of interest at which banks lend to its favoured customers especially to those with higher credibility. It is the basis of long-term loans and also the rate of interest.

In BPLR, PNB has announced to cut 1% rate on interest from 13.50% per annum to 12.50% per annum, which would be applicable with respect to all existing and new accounts linked with BPLR where rates are charged at BPLR and above.

Similarly for making balance in liquidity, it has slashed the deposit rates from 10.50% per annum to 9.50% for deposit period between 1 year and less than 3 years, while the interest rates in the time buckets having maturities of 180 days and above had also been reduced by 25 bps to 100 bps.

Earlier, PNB had slashed 1% BPLR on October 31, 2008 and this fresh announcement of cutting BPLR is a clear indication to begin the trend of chopping rate of interest on glooming credit sectors- home loan, auto loans, corporate loans and other short and long term loans.

The fresh deduction may work as fuel in the borrowing sectors and motivate the consumer to take loans who are avoiding it due to the ongoing economic crisis and higher rate of interest on basic loans, experts believe.

This move of PNB will also pressurise other banks to revise their BPLR and depositary rate as soon as possible to be in the competition.