The second largest public sector lender, Punjab National Bank (PNB) has declared a cut in its car loan rates by 50 basis points to 10.5%.

At the same time, the bank has also slashed the term deposit rates in some time bands. The interest rates under '46-90' days period and ‘180 days to less than one year' period have been cut by 50 basis points to 7%. However the deposits with other time slabs remain unchanged and interest rate offered for ‘one year to less than five years' will continue at 8%.

These rate changes by the bank will be effective from March 1st.

In a press release, PNB said that the car loan rates have come down to 10.5%-11% from 11%-11.5%. The interest rate charged by the car loan borrowers of the bank depends upon the creditworthiness of the customer.

A senior official of PNB confirmed that the rate cut would not leave any impact on the net interest income of the bank. The bank's revenue would not be affected. He further said that the bank would review the economic development in the country on a regular basis and will thereby respond in an appropriate manner.

Even Union Bank of India has revised the car loan rates by 125-150 basis points to 11% for loans up to three years and 11.25% for loans between three years and five years.

These banks seem to take cue from the industry leader, State Bank of India (SBI) that has frozen its car loan rates at 10% for one year.