No immediate plan to reduce lending rates: PNB

The country's second largest state-run lender, Punjab National Bank, has no immediate plans to further reduce lending rates, bank's Chairman and Managing Director K C Chakrabarty has said.

"We are already aggressive (on prime lending rate cut)...(but) immediately no plan," he told reporters here last night after the bank signed an agreement with state-owned Life Insurance Corporation (LIC). Under the agreement, the lender would sell insurance policies through its branches.

PNB has reduced its benchmark lending rate by 50 basis points to 11.50 per cent in February.

Earlier this month, the Reserve Bank had cut the short-term lending rate (repo) and short-term borrowing rate (reverse repo) by 50 basis points each, signaling banks to further reduce lending rates.

He further said unless the banks are able to reduce their deposit rates, they will not be able to reduce lending rates any more.

Chakrabarty said, "The government is giving 8 per cent on the saving (post office schemes), so I cannot go down below that."

However, the bank chief added, removal of certain structural bottlenecks like cross subsidisation of interest rates could help in reduction of prime lending rates.