Mumbai, April 19: Leading lenders including ICICI Bank and Punjab National Bank Thursday announced cut in both lending and deposit rates, just two days after the Reserve Bank of India lowered key policy rates.
The move will make housing, auto and other loans cheaper.
Punjab National Bank, the country’s second largest public sector lender, said it will cut the annual benchmark prime lending rate by 0.25 percent to 14 percent, effective from May 1.
The bank has also decided to lower the base rate, the rate below which it can’t lend, by 0.25 percent to 10.50 percent.
PNB will decrease the interest rate on term deposits of less than Rs.1 crore by 0.25 percent to 0.50 percent in select duration periods, the bank said in a statement.
All the changes in rates by PNB will be effective from May 1.
India’s largest private sector lender ICICI Bank said it will lower base rate and deposit rates by 0.25 percent effective from April 23.
It also announced 0.25 percent cut in its benchmark prime lending rate and its floating reference rate for consumer loans, including home loans.
“With the easing of systemic liquidity, we have already seen some correction in wholesale deposit rates. We expect the cost of funds to gradually come down and this reduction in the lending rates is a proactive move by us to pass on the benefit to our valued customers,” ICICI Bank managing director and chief executive officer Chanda Kochhar said in a statement.
ICICI Bank also announced a decrease in interest rates for various tenors of retail fixed deposits by 0.25 percent with effect from April 23.
The RBI in its annual monetary policy for 2012-13 announced on April 17, cut key policy rates by 0.50 percent. This is the first rate cut by the central bank in three years.
In order to provide additional liquidity cushion to the banking system, the RBI has enhanced the borrowing limit for banks under the marginal standing facility to 2 percent of net demand and time liabilities.
IDBI Bank had Wednesday announced 0.25 percent cut in lending and deposit rates.