Punjab National Bank has cut its prime lending rate by 50 basis points to 12 per cent and expects loan growth to rise 28-29 per cent in 2008-09 as rates ease, its Chairman and Managing Director K.C. Chakrabarty told a news conference on Monday (29^th December).

 

The bank has also cut interest rates on fixed rate housing loans by up to 175 basis points (bps) and another 50 bps on retail lending schemes like floating rate housing loans, car and education loans. All revised rates are effective Jan. 1, 2009.

 

Since mid-October the RBI has cut its main interest rates and reduced banks' cash reserve requirements by 350 basis points to shield the economy from the fallout of the credit crisis.

 

The state-owned PNB expects results for the quarter-ended December to fall in line with expectations with strong deposit and credit growth, Chakrabarty said. While Chakrabarty expects interest rates to fall further, which would stimulate demand in the economy, he does not see a rise in bad debts for now.

 

PNB sees cost of funds dropping 100 basis points by mid-2009 while margins will remain intact, Chakrabarty said.