PNB defers plan to hike deposit rates

Punjab National Bank has deferred its plan to hike deposit rates and will review them in 15-30 days, Chairman and Managing Director K C Chakrabarty said today.

"We are not in a rush to raise deposit rates. We will wait to see whether banks across-the-board cut deposit rates, as was asked by the finance minister," Chakrabarty said.

Most banks including State Bank of India, ICICI Bank, Canara Bank, Bank of India, Bank of Baroda and Dena Bank have cut deposit rates amid ample liquidity.

Last week, Finance Minister P Chidambaram urged banks to cut deposit rates, as they had hiked them by 50-100 basis points in March due to the tight liquidity condition prevailing at the end of 2006-07.

Many banks cut their deposit rates on the day when the Reserve Bank of India hiked the cash reserve ratio rate to 7 per cent, to protect their cost of funds.

Going against the tide, state-run bank PNB had announced late last month that it may hike its deposit rates because they were below market rates.

"We may hike deposit rates from 7.5 per cent to 8 per cent and from 8 per cent to 8.25 per cent, but it will remain below 9 per cent," Chakrabarty had said.