The reduction will be effective June 8, PNB said in a statement.
The decision to cut interest rate on fixed deposits comes a day after the Reserve Bank of India reduced the key policy rate.
As part of its second bi-monthly monetary policy review, RBI had yesterday cut the repo rate (short-term lending rate) from 7.5 per cent to 7.25, but had left other policy tools like cash reserve ratio unchanged at 4 per cent and statutory liquidity ratio (SLR) at 21.5 per cent.
Following policy action, State Bank of India has reduced its base rate or minimum lending rate to 9.70 per cent from 9.85 per cent effective June 8.
Another state-owned Allahabad Bank has cut the base rate by 0.3 per cent to 9.95 per cent, while Dena Bank, and Punjab & Sind Bank have reduced their base rate by 0.25 per cent each to 10 per cent.
With the reduction, all loans linked to the base rate will come down proportionately.
IDBI Bank, however, has reduced the bulk deposit rate, a move which is a precursor to a cut in lending rate. Other banks are likely to follow suit in the next few days.
Source : Thehindubusinessline