Tuesday saw a reduction in interest rates on various non resident schemes by the country's second largest government-owned commercial bank, Punjab National Bank (PNB).

FCNR (B) Scheme's interest rates for dollar deposits with maturity tenure between one and two years have been reduced from 2.50 per cent to 2.46 percent.

The rates for dollar deposits with maturity period between 2-3 years, 3-4 years and 4-5 years have also been slashed down. For maturity between 2-3 years rate is 2.56 per cent while for 3-4 years and 4-5 years the rates are 2.88 per cent and 3.10 per cent respectively.

The rates for dollar deposits with maturity period between 2-3 years, 3-4 years and 4-5 years have also been slashed down. For maturity between 2-3 years rate is 2.56 per cent while for 3-4 years and 4-5 years the rates are 2.88 per cent and 3.10 per cent respectively.

The NRE deposit scheme interest rate has been reduced to 3.21 per cent for 1-2 year deposits. Those with a maturity of 3-5 years will yield an interest rate of 3.63 per cent.

Presently the bank is offering credit cards, auto loans, home loans, personal loans, fixed deposits, saving account and education loan to its customers and is unlikely to raise interest rates for the next 5-6 months even if the central bank raises its key lending rate.

The state-run bank chief, K.C. Chakravorthy, said an increase of 50 basis points in CRR or an increase of 25 basis points in the repo rate would not affect the bank's margin by more than 10-15 basis points.

The bank expects to achieve its net income targeted growth by keeping its interest rates constant except for non-resident schemes.

Mr Harpreet Singh, Business Director (Wealth Management, Distribution and Loans), Centurion Bank of Punjab, agreed that there has been a slowdown in FCNR deposits in the last few months. "The interest rate differential is not much as the RBI policy does not encourage very high rates. In our experience lot of NRI customers have diverted funds into real estate, though not much to equity," he said.