PNB hikes deposit rates by 25-125bps

PNB hikes deposit rates by 25-125bps

BS Reporter / New Delhi August 14, 2007

Realigning its interest rates to market rates, Punjab National Bank (PNB) today hiked interest rates on fixed deposits by 25 to 125 basis points for various maturities effective August 16.

K C Chakrabarty, chairman and managing director, PNB said the move is an adjustment to market rates after it was noticed that rates have not been revised for two years.

PNB has increased rates by 125 basis points to 8.75% for 2-3 year deposits below Rs 15 lakh from 7.5%. The bank increased deposit rates by 50 basis points to 8% for deposits below Rs 15 lakh and by 25 basis points to 8.25% for deposits above Rs 15 lakh for 1-2 year deposits.

"We had recently withdrawn a special deposit scheme, which was giving 9.5% for one-year deposits. High interest rates on deposits are not sustainable," Chakrabarty said.

Recently, Finance Minister P Chidambaram had expressed hope that deposit rates will stabilise around 8.5%.

Most of the banks, including State Bank of India and ICICI Bank, have recently reduced interest rates on deposits after RBI hiked the amount of depositors