Lower interest rate regime begins; PNB follows IDBI Bank in cutting rates

Business

oi-Sunil

By Sunil Fernandes

Published: Thursday, April 19, 2012, 9:25 [IST]

A reaction to the RBI repo rate cut announced on Tuesday has begun in right earnest. Close on the heels of IDBI Bank which announced rate cuts on Wednesday, Punjab National Bank has decided to slash lending and deposit rates.

Punjab National Bank has decreased its base rate by 25 bps from 10.75% to 10.50% with effect from May 01, 2012.

The Bank has also reduced the Interest rate on term deposits of less than Rs 1 crore by 25 bps to 50 bps in select buckets w.e.f May 01, 2012.

On Wednesday it may be recalled that the state-owned IDBI Bank announced a cut of up to 0.5% in lending and deposit rates, a day after Reserve Bank reduced key short-term rates. While IDBI Bank lowered lending rate by 0.25%, it cut the fixed deposit rate by as much as 0.5%.

The new rates will be effective from April 20, IDBI Bank said in a statement.PNB was trading marginally lower by Rs 2 at 9.20 am. On Tuesday the RBI had cut repo rates by 50 basis points. Repo rates are rates at which the RBI lends to banks and a drop in these rates, generally tends to bring down interest rates.

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