It has also effected an across-the-board 100-150-basis point cut in deposit rates on all maturities. The new rates are effective from May 12. BoB's new PLR is 25 basis points lower than the lending rates of major state-run banks like the State Bank of India, Bank of India and Union Bank of India, which have reduced their lending rates from 13.5 to 13 per cent in the wake of a one percentage point cut in the bank rate and the repo rate, announced in the Reserve Bank of India's April credit policy. BoB has also reduced its lending rate for advances between Rs 25,000 and Rs 2 lakh from 13 per cent to 12.5 per cent.

BoB's board, which met in Mumbai on Friday, decided to go for an aggressive cut in its PLR. "The board decided to take some risk at this point,'' said a top official, adding thatthe bank will not face any interest rate mismatch as the deposit rates are also being reduced simultaneously.

The interest rate on pre-shipment rupee export credit is brought down from 12 per cent to 11 per cent with effect from April 30. The bank's net spread -- currently pegged at 3.6 per cent -- will not be affected by the cut in PLR, sources said. BoB's cost of the deposit is less than eight per cent while the yield on advances is pegged at 12.7 per cent. The bank has decided to offer 50 basis points higher interest on domestic term deposits of over Rs 15 lakh and less than Rs 1 crore in the maturity band of one year and above. The discretionary rate for deposits of Rs 1 crore and above will be decided by the bank after taking into account its funds position and market environment on a day-to-day basis.

The bank has decided to continue the existing penalty rate of paying one per cent less for a small amount; and for a bulk amount it will be slightly more, said BoB officials.

The bank is offering 5per cent for deposits of 15-45 days, 6 per cent for 46-90 days, 7 per cent for 91-179 days, 8 per cent for 180 days-one year, 9 per cent for one-two years, 10 per cent for two-three years and 11 per cent for three years and above. The new interest rates on NRE deposits are 8.5 per cent for six months-one year, 9.5 per cent for one-two years, 10.5 per cent for two-three years and 11.5 per cent for three-five years.