Mumbai: Punjab National Bank has announced a 50 basis point reduction in its base prime lending rate (BPLR), from 14 per cent to 13.5 per cent, effective 1 November.

This is expected to have a softening effect on PNB's interest rates for home, car and personal loans.

PNB had earlier announced a 50 basis point reduction in interest rates for both floating rate and fixed rate housing loans and educational loans for existing as well as prospective borrowers.

''We have decided to reduce the prime lending rate (PLR) by 50 basis points effective tomorrow," PNB chairman and managing director K C Chakrabarty said, adding, the revised rate will be applicable to existing as well as new borrowers.

PNB is the first bank to cut prime lending rate after the Reserve Bank of India took a series of steps, including a 250 basis point reduction in the cash reserve ratio for banks and a 100 bps reduction in its repo (repurchase) rate, to infuse liquidity into the system.

PNB also announced a reduction in the peak deposit rate, from 10.5 per cent to 10 per cent, beginning December.

PNB's move to reduce both lending and deposit rate may prompt other banks to follow suit.

Punjab National Bank, meanwhile, reported a 31.1 per cent increase in second quarter (July-September) net profit at Rs707.09 crore. Net profit for the first six months of the current financial year rose 26.56 per cent at Rs1,219.5 crore.

PNB, with a network of 4,335 branches and strong technology platform (99 per cent of the business covered under core banking solution), has a presence in Dubai, UK, Hong Kong, Shanghai, Singapore and Kabul. It also plans to expand its presence in the existing countries and also in Canada, Norway and Bhutan.