The second round of cut in lending rates by banks seems to have started even before the Reserve Bank of India could come out with its next course of action.After cutting its benchmark prime lending rate (BPLR) on October 31, Punjab National Bank (PNB), India’s second largest public sector bank, on Wednesday again reduced its BPLR by 100 bps from 13.50 per cent per annum to 12.50 per cent per annum with effect from December 1, 2008. The bank said the revised rates would be applicable with respect to all existing and new accounts linked with BPLR where rates are charged at BPLR and above.Simultaneously, the bank also decided to reduce its deposit rate from 10.50 per cent per annum to 9.50 per cent per annum for deposits of 1 year to less than 3 years. Further, the bank said that the interest rates in the time buckets having maturities of 180 days and above had also been reduced by 25 bps to 100 bps.“Other PSU banks are expected to follow suit in the coming weeks in view of competition in the sector,” said a banking source. Earlier, after a series of rate cuts by the RBI, PNB was the first bank to announce a cut in its benchmark prime lending rate by 50 basis points to 13.5 per cent on October 31. This came into effect from November 1, the day when the RBI last cut the repo and CRR.SBI cut its PLR by 75 basis points to 13 per cent with effect from November 10. SBI also reduced interest rates on deposits by 50 basis points across maturities from 91 days up to five years. For maturities of five years and above, SBI has cut its interest rates by 25 bps. The deposit rate reductions will come into effect from December 1.
