Punjab National Bank Follows Peers In Reducing Savings Rate
PNB becomes the eighth Indian bank to cut savings interest rates.
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State-owned Punjab National Bank joined State Bank of India and other peers in cutting interest rates on savings deposits as Indian lenders seek to pare costs incurred on large balances in savings accounts.
The lender will introduce a two-tier savings rate structure with effect from August 19, it said in a stock exchange filing on Thursday. PNB will reduce the interest rate for savings deposits up to Rs 50 lakh by 50 basis points to 3.5 percent while deposits higher than Rs 50 lakh will continue to attract a rate of 4 percent. It’s the eighth Indian bank to cut the savings rate.
India's demonetisation activity in November last year had triggered a surge in bank deposits, which were expected to flow back into the system once withdrawal limits were raised in March. However, the deposits have proved to be sticky at a time when credit growth in the banking system is moderate and liquidity is ample. Banks have used this as an opportunity to bring down their costs of deposits.
The country’s largest lender SBI was the first to reduce the interest rate on savings deposits worth Rs 1 crore and below to 3.5 percent from 4 percent earlier. Axis Bank too said that it will offer 3.5 percent interest on savings accounts worth Rs 50 lakh and below compared with 4 percent earlier. ICICI Bank is yet to announce any change in rates. Earlier in the day, HDFC Bank too cut rates by a half a percentage point.
Other lenders like Bank of Baroda and Karnataka Bank also reduced the interest rates on some savings account deposits.
Among the newer private banks, Yes Bank said on Wednesday that it will offer 5 percent on savings deposits worth Rs 1 lakh and less, as compared with 6 percent earlier, it said in a notification to stock exchanges. For deposits between Rs 1 lakh and Rs 1 crore, it will continue to offer 6 percent. For deposits worth Rs 1 crore and above, Yes Bank will offer 6.25 percent, down from 6.5 percent earlier.
Kotak Mahindra Bank said that it will hold the interest rate for low-value deposits while reducing the rate on savings deposits between Rs 1 crore and Rs 5 crore.