Punjab National Bank cuts fixed deposit rates by 0.25%

State-owned Punjab National Bank today reduced interest rate on fixed deposit by 0.25 per cent on select maturities, a moves which is seen as precursor to cut in the lending rate.

The rate of interest on fixed deposit in between one to five years has been reduced to 8.5 per cent from 8.75 per cent, PNB said in a statement.

However, PNB did not cut its lending rate despite several banks lowering it in the recent past.

The revised rate would be effective from April 23, it said.

Many banks including State Bank of India, HDFC Bank and Axis Bank last week cut lending rates by up to 0.25 per cent after RBI Governor Raghuram Rajan's tough talk with bankers on the issue.

After cutting the key rate twice this year, the central bank kept it unchanged at 7.5 per cent in its monetary policy on April 7.

The Reserve Bank had blamed banks for not passing the benefits of two repo rate cuts to borrowers and termed as "nonsense" the lenders' claims that cost of fund was high.

"The banks marginal cost of funding (has) fallen, the notion that it hasn't fallen, is nonsense; it has fallen" Rajan had said.