The Hindu Business Line : PNB to cut lending rates by 50 bps

New Delhi, Feb. 25 Punjab National Bank (PNB) on Monday announced that it has decided to reduce its benchmark prime lending rate (BPLR) by 50 basis points from 13 per cent to 12.5 per cent effective March 1 this year to give impetus to credit growth.

The bank has also decided to reduce interest rates by 50 basis points on loans that are not linked to BPLR such as housing loans above Rs 20 lakhs, where interest rates will now be in the range of 9.5 per cent to 10.5 per cent as against the existing rates ranging from 10 per cent to 11 per cent. Interest rates on car loans and consumer loans (personal loans) would also be cut by 50-100 basis points from March 1.

“I don’t think these decisions would affect our bottomline for the current fiscal even though the pressure on margins are always there in a competitive environment. We will, however, be able to maintain net interest margin (NIM) of 3.5 per cent. We will also achieve the profit targets under the statement of intent filed with the Finance Ministry”, Dr K.C. Chakrabarty, Chairman and Managing Director of PNB, told Business Line here.

PNB has also decided to reduce by 50 basis points the interest rates on loans granted for the second house.

The interest rates on housing loans upto Rs 20 lakhs would continue to be in the range of 9 per cent to 10 per cent.

Dr Chakrabarty said that PNB had been progressively reducing the deposit rates from July 2007 onwards and also been consciously reducing the dependence on bulk deposits at higher rates to reduce the cost of funds.

“The lag effect of these measures will start accruing now resulting in lower cost of funds. The latest move to reduce BPLR and the earlier reduction in deposit rates would cancel each other and therefore be revenue neutral”, he added.

More Stories on : Interest Rates | Public Sector Banks | Punjab National Bank

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