Realigning its interest rates to market rates, Punjab National Bank (PNB) today hiked interest on fixed deposits by 25 to 125 basis points for various maturities with effect from August 16. | |
| "It is a realignment of two-year-old deposit rates," K C Chakrabarty, chairman and managing director, told Business Standard. |
| |
| Its not a hike but an adjustment to the market rates after it was noticed that these rates were not revised upward in last two years, he added. |
| |
| PNB increased deposit rates by 125 basis points to 8.75 per cent for 2-3 year deposits below Rs 15 lakh from 7.5 per cent. |
| |
| The bank also increased deposit rates by 50 basis points to 8 per cent for deposits of below Rs 15 lakh and by 25 basis points to 8.25 per cent for deposits above Rs 15 lakh for 1-2 year deposits. |
| |
| "We had recently withdrawn a special deposit scheme, which was giving 9.5 per cent per annum for one-year deposit. High interest rates on deposits are not sustainable," Chakrabarty said. Recently, finance minister P Chidambaram had expressed hope that deposits rates will stabilise around 8.5 per cent. |
| |
| Most of the banks, including State Bank of India and ICICI Bank, have recently reduced interest rate on deposits after the RBI hiked the amount of depositors' money commercial banks need to park with the central bank by half a percentage point. |
| |
| PNB, the second-largest public sector lender, expects credits and deposits to grow by 20 per cent and 18 per cent in 2007-08. "Interest rates will remain stable till end of the year," Chakrabarty said, adding that the bank has no plans to increase lending rates in the near future. |
| |
| The total business (deposits and advances) of the bank grew 22 per cent to Rs 2,38,249 crore in 2006-07. Deposits grew 21.7 per cent to Rs 1,42,609 crore while advances rose 23 per cent to Rs 95,640 crore in the last financial year. |
| |
|
| |
