The New Nation - Internet Edition

PTI, Mumbai

Two leading Indian public sector lenders Punjab National Bank (PNB) and Bank of Baroda (BOB) yesterday said they will reduce their prime lending rate by 50 and 75 basis points, respectively with effect from January 1.

Besides, PNB also announced a reduction in its peak deposit rate by 100 basis points to 8.5 percent for deposits of one year to less than three years beginning new year, the state-run lender said in a filing to the Bombay Stock Exchange (BSE).

Earlier this month, the bank had reduced its peak deposit rate to 9.50 percent from 10.5 percent.

In a separate regulatory filing to the BSE, Bank of Baroda said "The bank has decided to reduce its Benchmark Prime Lending Rate (BPLR) by 75 basis points from existing 13.25 percent to 12.50 percent with effect from January 1, 2009."

The BPLR of PNB would stand reduced to 12 percent, from the existing 12.50 percent, effective from January 1.

With the revision, PNB's deposits having maturities of 46 days and above will attract an interest rate of 1.25 percent from the earlier 1.50 percent, the filing said.

Besides, the country's second largest private sector lender has also reduced interest rates on various retail lending schemes such as floating rate housing loans, car and education loans by 50 bps.

"The interest rates on fixed rate housing loans have been reduced by up to 175 basis points with effect from January 1," PNB added.

Further, the bank has introduced a housing loan scheme-PNB Special Housing Loan Scheme-for new accounts from January 1, 2009, till June 30, 2009.

Under the fixed housing loan of up to Rs five lakhs for maximum period of 20 years, PNB would charge interest rate at 8.5 percent.

Also fixed rate housing loans of above Rs five lakhs to Rs 20 lakhs for a maximum period of up to 20 years would attract interest of up to 9.25 percent.

"The interest rate will be subjected to reset on July 1, 2014, for the scheme," PNB added. The rate cut came shortly after country's largest lender State Bank of India announced a 0.75 percentage point cut in its prime lending rate and a 0.25-1 percentage point reduction in deposit rates from January 1.

Also other leading state-owned lender Union Bank of India reduced its deposit rates and Canara Bank announced reductions in their deposit and MSME lending rates.