State-run, Punjab National Bank (PNB) has announced a cut in its fixed deposit rates by 50 to 100 basis points with effect from April 1st, 2009.

The interest rates have been slashed in the time slabs of less than 3 years. "Punjab National Bank has informed BSE that the Bank has decided to realign the interest rates on retail term deposits by reducing interest rates by 50 bps to 100 bps in the time slabs from ‘91 to 179 days' to ‘2 years to less than 3 years'," stated a bank release.

Interest rate for deposits between 91 and 179 days, interest rates have been lowered by 50 basis points to 5% where as deposit rates for terms of 180 days to 1 year have been cut by 100 basis points to 6%. Similarly the interest rates for deposits with maturity raging between 1 year and 2 years have come down to 7% from earlier 8%.

The deposit rates in other time slabs remain unchanged and the peak rate that the bank offers is 8% for the tenures between 3 years to less than 5 years.

The deposit rates of the banks will now start dropping on the back of sharp fall in the lending rates in the recent weeks following the RBI's cut in policy rates.

PNB has been the first bank in the industry to cut the deposit rates.