ICICI Bank says it will reduce rates early next month
Punjab National Bank (PNB) and Dena Bank today announced a reduction in their benchmark prime lending rates (BPLR), while the country’s second largest lender, ICICI Bank, said it would cut rates on home, personal and auto loans early next month.
While PNB cut its BPLR by 50 basis points to 12 per cent, the lowest in the industry, Dena Bank said it will reduce its key lending rate by 75 basis points to 12.75 per cent, effective January. Both banks also announced a reduction in deposit rates. Another public-sector player, IDBI Bank, said it will lower deposit rates by 25-150 basis points, across various maturities from next month, but left lending rates unchanged for the moment.
ICICI Bank Managing Director and Chief Executive Officer K V Kamath told PTI that it will cut interest rates early in January for housing and other loan customers. While the extent of the rate cut is being finalised, Kamath said it would be a new year gift to the bank’s customers.
| DECLINING TREND Dena Bank, Punjab National Bank today cut lending rates | |||
| Lender | PLR cut (bps) | New PLR (%) | Effective date) |
| Dena Bank | 75 | 12.75 | 1 Jan ‘09 |
| BoB | 75 | 12.50 | 1 Jan ’09 |
| SBI | 75 | 12.25 | 1 Jan ‘09 |
| Union Bank | 75 | 12.50 | 8 Dec ‘08 |
| Bank of India | 75 | 12.25 | 1 Jan ‘09 |
| Corp Bank | 75 | 12.50 | 1 Jan ’09 |
| PNB | 50 | 12.00 | 1 Jan ‘09 |
| HDFC | 50 | 14.50 | 22 Dec ‘08 |
| HDFC Bank* | 50- | 16.00 | 1 Jan ‘09 |
| Yes Bank | 50 | 16.50 | 8 Dec ‘08 |
| *Reduction was in two trenches with first one effective from Dec 15, '08, bps: Basis points, PLR : Prime lending rates | |||
PNB Chairman and Managing Director K C Chakraborty, who announced the rate cuts at a press conference, said the move was taken expectating further monetary policy measures from the Reserve Bank of India in the coming days. During the last two months, PNB has cut its BPLR thrice, taking the total reduction to 200 basis points.
While talking about the measures initiated by RBI so far, the PNB chief said: “The Indian economy has transited from a high interest rate to a low interest rate regime. This has helped reduce the cost of funds (for banks).”
With the 25-125 basis point reduction in deposit rates, PNB will offer a peak rate of 8.5 per cent on funds with a maturity of one-three years, as against 9.5 per cent so far.
Similarly, Mumbai-based Dena Bank also said it will cut deposit rates by 25 to 100 basis points in different maturities.
IDBI Bank reduced the interest rate on retail term deposit by 50-150 basis points and also realigned its maturity buckets. The bank is introducing a longer maturity term deposit of 1,100 days with interest rate for normal depositors at 9.5 per cent a year.
IDBI Chairman and Managing Director Yogesh Agarwal said he expects interest rates to fall in 2009 as well but will only lower lending rates when the cost of funds come down for the bank. “We expect a 50-75 basis points reduction in cost of funds over period due to revision in deposit rates,” he said.
