PNB reduces PLR to 12%
By Vaibhav Aggarwal
Dec 30, 2008
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State-run, Punjab National Bank has reduced its prime lending rate (PLR) by 50 basis points to 12% from 12.5% with effect January 1st. All the rates linked to the PLR have been revised by the lender.

The deposit rates across various maturities have been reduced and the peak rate has been cut by 100 basis points to 8.5% for deposits of one year to less than three years. Earlier in this month, PNB had reduced its peak deposit rate from 10.5% to 9.5%. Similarly deposit rates with tenures of 46 days and above have also been reduced by 25 to 125 basis points with effect from New Year.

The interest rates on some retail lending portfolio which includes floating-rate housing loans, car loans and education loans of the bank have also been reduced by 50 basis points. "The interest rates on fixed rate housing loans have been reduced by up to 175 basis points with effect from January 1," said PNB.

PNB's Chairman K.C. Chakrabarty said that the reduction in the lending rate would not yield any revenue to the bank. It expects its net interest margins to range between 3.4% and 3.5%. Net interest margin is a measurement of the difference between the interests of the income generated by banks.

Meanwhile it was also informed that the bank will introduced a new Housing Loan scheme called "PNB Special Housing Loan Scheme" for new borrowers for the period between January 1st, 2009 and June 30th, 2009. The new scheme will offer fixed housing loan up to Rs 5 lakh with maximum repayment of 20 years at 8.5% and fixed housing loans of above Rs 5 lakh and up to Rs 20 lakhs for a maximum period up to 20 years will be extended at 9.25%. However these interest rates are subjected to change on July 1st, 2014.

Bank of Baroda, another public sector bank has also cut its PLR by 75 basis points to 12.50% from 13.25% with effect from January 1st, 2009.


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