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BoB, Union Bank to cut PLR, deposit rates

MUMBAI MAY 1. Taking the cue from the Reserve Bank of India's half-yearly Monetary and Credit Policy, leading public sector banks have decided to work out a single prime lending rate (PLR) and reduce the PLR and the deposit rate by 0.25 percentage point each.

While Bank of Baroda (BoB) and Union Bank of India have decided to lower their PLR and deposit rates by 0.25 percentage point to 10.25 per cent each, Bank of India (BoI) would take a decision in its forthcoming board meeting in the third week of this month.

BoB and Union Bank will hold the board meeting and asset liability management (ALM) meeting tomorrow to formally approve the decision and make it effective from Monday next.

"We have decided to lower the PLR and deposit rate and a formal announcement would be made after tomorrow's Board meeting,'' said Union Bank CMD, V. Leeladhar. "We would revise our two-tier PLRs by 0.25 percentage point while for deposit rate cut, it would not be across-the-board," said Bank of Baroda CMD, P. S. Swenoy. The bank would like to evaluate the impact of lowering the deposit rate and select a few term deposit rates for revision, he added.

BoI CMD, K. V. Krishnamurthy, said that it was irrelevant for the bank to adjust the PLR rate since majority of the borrowings were now done on the basis of LIBOR (London Inter-Bank Offered Rate) rate and sub-PLR rate.

"Obviously, we will work on evolving a single PLR concept in near future and take decision on PLR revision in line with the trend of the banking industry. Our board will meet in third week of May," he said.

Notwithstanding the downward revision of rates, bankers observed that there would be no substantial credit take-off from the corporates in the immediate future. "We do not find any positive credit demand from the industry so far," said Mr. Krishnamurthy. — UNI

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