Following industry peers, Punjab National Bank (PNB) on Wednesday announced to lower interest rate on savings account deposits by 0.50 percentage point, effective July 1.

For deposits up to Rs 50 lakh, the new interest rate will be 3 per cent, down by 0.50 per cent from 3.50 per cent. Deposits of Rs 50 lakh and above will earn interest of 3.25 per cent as against 3.75 per cent currently. The rate of interest on savings fund deposit has been reduced with effect from July 1, 2020, Punjab National Bank said in a tweet.

‘ Interest shall be paid on a daily product basis at the rate of 3 per cent per annum in accounts where the end-of-day balance is up to Rs 50 lakh and at the rate of 3.25 per cent per annum in accounts where the end-of-day balance is above Rs 50 lakh. Interest shall be credited at end of each quarter i.e. February, May, August and November,’ PNB said.

The trimming of interest rate on deposits follows industry peers such as country’s largest lender SBI, followed by Axis Bank and ICICI Bank. Banks currently have sufficient liquidity, while the demand remains weak due to lockdown situation induced by the coronavirus pandemic.

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This has pressured the core interest income as less demand has created a mismatch between interest earned on loans and interest outgo on savings deposits.