The Hindu Business Line : PNB hikes rates on term deposits

In an apparent bid to retain market share in a competitive market for deposit mobilisation, Punjab National Bank (PNB) on Saturday hiked term deposit rates by 25 to 75 basis points on various maturities above 180 days.

PNB had last increased interest on term deposits on July 1. The latest revision in interest rates would be effective from August 7.

As on June 30, deposits of the bank stood at Rs 1,17,173 crore. This represented a 15.7 per cent increase over the Rs 1,01,303-crore deposit level in June 2005. Cost of deposits as on June 30 stood at 4.38 per cent.

Low cost deposits accounted for about 48 per cent of total deposits. PNB wants to grow the contribution of low cost deposits to 50 per cent this fiscal year.

The PNB Chairman, Mr S.C. Gupta, said that the bank has announced the hike in deposit rates after factoring in the hardening interest rate in Government securities market and the credit pick up in the economy. He also felt that the increase in term deposit rates would give a fillip to the economic development in the country.

Mr Gupta expressed confidence over tackling the reduction in margins through better recovery management in the asset portfolio. Net interest margin of the bank in June stood at 4.10 per cent.

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