Punjab National Bank has released an official statement that it would not be slashing rates on retail advances until the cost of funds decrease. Bank's retail loans are majorly comprised of home loans and car loans.
Bank's Chairman and MD Mr. KR Kamath added that the bank had already reduced the rates on housing finance before the RBI announced a 1% cut in statutory liquidity ratio (SLR). PNB's home loans are available at 10.75% for loans upto Rs. 75 lakh and 11% for loans above Rs. 75 lakh.
Mr. Kamath further added that the rate at which bank gives credit is a function of the cost of funds, and if the bank further reduces loan rates, it would not be able to attract more depositors.
Reduction in home loans was started by State Bank of India (SBI) which reduced their interest rates soon after the RBI announced SLR cut, which was followed by Central Bank of India which recently cut its rates. The two banks are offering home loans upto Rs. 30 lakh at 10.25% and 10.5% respectively.
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