PNB, IndusInd cut interest rates further

The latest round of interest rate cuts began today with Punjab National Bank (PNB) and IndusInd Bank announcing reductions in their benchmark prime lending rates (BPLRs) by 50 basis points (bps) and 25 bps respectively.

With this announcement, the BPLR of PNB, which will also lower deposit rates by up to 100 bps, will come down to 11.50 per cent, while that of IndusInd Bank will fall to 16.75 per cent.

In addition, the National Bank for Agriculture and Rural Development (Nabard) has decided to slash its refinance rates by 50-75 bps. At present, Nabard’s refinance rate for investment credit ranges between 9.25 and 10.25 per cent.

Nabard chairman Umesh Chandra Sarangi told Business Standard that the changes in the refinance rates were in line with market rates. The cost of funds has dropped in recent weeks, he added. The changes in Nabard and PNB’s lending rates will be effective from Sunday, while IndusInd Bank’s new BPLR will come into effect from Monday.

Since November, PNB has reduced its BPLR by 200 bps, the steepest in the industry. PNB CMD K C Chakrabarty said there was adequate scope for banks to cut interest rates after the Reserve Bank of India (RBI) slashed the key rates.