PNB's base rate likely to be between 8-8.5%: Kamath

State-run Punjab National Bank (PNB) expects its base rate to be between 8-8.5 per cent, its Chairman and Managing Director K R Kamath said today.

The Reserve Bank of India (RBI) had introduced base rate for banks instead of the erstwhile benchmark prime lending rate system effective from July 1, 2010.

However, banks are free to decide the methodology to arrive at their respective base rates or to change and fine tune the method of calculating the new rate till December.

The base rate, below which banks cannot lend, will replace the current system of benchmark prime lending rate (PLR) and is expected to improve transparency of lending.

The PLR system has been drawing flak from various quarters as banks used to lend to highly-rated corporates way below their benchmark rate, making the system irrelevant and opaque.

PNB reported a 31.1 per cent jump in its net profit for the quarter ended March 2010. Net profit stood at Rs 1,135 crore during the quarter against Rs 866 crore in the same period last year.

Total income, during the quarter, rose 6.8 per cent to Rs 6,461 crore, against Rs 6,048 crore in the year-ago quarter.