State Bank of Bikaner and Jaipur (SBBJ), which is an associate bank of State Bank of India (SBI), is also among the league to cut prime lending rate. The bank has declared a 50 basis points cut in its PLR to 12.75% with effect from January 1st.
Besides, the bank has also cut its deposit rates by at least 50 basis points. For instance interest rates for term deposits with tenure ranging between one year and two year has been reduced down from 10.25% to 9%. On the other hand, deposit for three to five years, have come from 9% to 8.5%.
In addition, the bank informed that senior citizens will avail extra benefit of 50 basis points under deposits with more than one year tenure.
These new interest rates of the bank will be applicable from the beginning of the New Year.
The announced made by SBBJ came soon after Punjab National Bank (PNB) cut its PLR to 12%, the lowest in the industry. The new PLR for PNB is also valid from January 1st.
Banks are lining up for a reduction in their interest rates because there are expectations that RBI would relax the key policy rates and cash reserve ratio (CRR) further to increase the money supply in the system.
Recently SBI, the parent bank of SBBJ, has also cut its PLR by 75 basis points to 12.25% from 13% earlier. Even Bank of Baroda and Dena Bank has cut their PLR down to 12.5% and 12.75% respectively with effect from January 1st.
As all the banks in the industry are resorting to a reduction in their interest rates, low interest regime is likely to prevail in the economy.