Major PSU banks announced cut in PLR in the beginning of New Year

Major lenders, including public sector Punjab National Bank, Bank of Baroda, ICICI Bank and Dena Bank have announced that they will be reducing their prime lending rate by 50 to 75 basis points with effect from 1 January 2009.

In a filing with the Bombay Stock Exchange, Punjab National Bank, the country's second largest public sector lender informed that it will be also reduceing interest rates on schemes such as floating rate housing loans, car and education loans by 50 bps.

"The interest rates on fixed rate housing loans have been reduced by up to 175 basis points with effect from 1 January," PNB said.

The bank has introduced a housing loan scheme -- PNB Special Housing Loan Scheme. This scheme has been launched for new accounts from 1 January till June 30, 2009.

PNB is also reducing a 100 basis point in its peak deposit rate to 8.5 per cent for deposits of one year to less than three years.

PNB has reduced deposit rates for the second time in one month. Previously this month, the bank had reduced its peak deposit rate from 10.5 per cent to 9.50 per cent. According to filing deposits having maturities of 46 days and above will draw an interest rate of 1.25 per cent from the earlier 1.50 per cent.

In a separate regulatory filing Bank of Baroda said, "The bank has decided to reduce its benchmark prime lending rate (BPLR) by 75 basis points from the existing 13.25 per cent to 12.50 per cent with effect from 1 January 2009."

Dena Bank another public sector lender said it will reduce benchmark lending rate by 75 basis points to 12.75 per cent in accordance to the liberal monetary policy announced by RBI earlier this month.

With effect from Jan1, 2009 the bank's BPLR stands reduced from 13.5 per cent to 12.75 per cent, Dena Bank stated this in a filing with the Bombay Stock Exchange.

ICICI bank private sector lender is offering a New Year gift for its housing, auto and personal loan customers in the form of a cut in interest rates.

Its CEO and managing director K V Kamath said, without giving out details, ''We are looking at cutting interest rates very early in January for our housing and other loan customers''.

The extent of the rate cut is being regulated and will be announced soon, he said.

Before ICICI this month had reduced home loan rates for new customers by up to 1.5 percentage points.

Meanwhile State Bank of India (SBI), the country's largest lender, has also announced a reduction in its prime lending rate by 75 basis points to 12.25 per cent with effect from 1 January. On the other hand home loan major HDFC Bank has also cut its prime lending rate by 50 basis points.