PNB hikes interest rates by 25-75 bps across all maturities

New Delhi, Aug 5 (UNI) Notwithstanding the heat and dust created by the Finance Ministry's dictum to Public Sector Bank's to be cautious on interest rates hikes, Punjab National Bank, the largest Nationalised Bank, today announced increase in fixed deposit rates on all maturities.

"The interest rate on domestic term deposits was last increased on July 1,2006, but signalling a tightening trend, PNB has increased interest rates for deposits by 25 to 75 bps in the range on all maturities of 180 days and onwards", a Bank release said here.

The revised interest rates are effective from August 7,2006.

"PNB has announced this hike taking care of the hardening of interest rates in government securities market and the credit pick up which have been the key triggers", PNB CMD S C Gupta said.

Mr Gupta was hopeful that this would take care of the reduced margins by better management recovery in the asset portolfio. "PNB is sure of avoidining any asset liability mismatches by simultaneously managing its interest spreads", he said.

Finance Minister P Chidambaram stated yesterday that the government has asked Public Sector Banks to take prior approval of their Boards of Directors before effecting any hike in interest rates and justified this by saying that government was a majority shareholder in these Banks.

The Finance Ministry has been concerned over the decision of the Bank's to raise interest rates, following the hardening of interest rates after the decision fo the RBI to raise repo rate and reverse repo rate twice consecutively totalling 50 bps.

The Finance Minister, however, said that it was up to the Banks to decide on interest rates and the government would only give its views.

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