Risk rating determines our lending rate :PNB

" Technology advancements in banking operations not only make transactions cost effective but also easy and quick. Avail (yourself' of)internet facility, use technology,"urged the Field General Maneger(Chennai) of state-oriented Punjab National Bank, Mr. S. Ranganathan in a meeting with the selected customers at Tirupur.
His reminder and reiteration on use of technology was in response to a customer's request for slashing interest rates.
The bank had invited around 25 customers for a 'customer meet' on Thursday. When a customer raised the issue of rising borrowing cost, the banker said that PNB's Prime Lending Rate (PLR) was the lowest in the industry. They have since June switched to Base Rate.Due to inflationary pressures, the rate of interest on deposits has gone up and with it bank's cost of funds is also registering an increase. The Bank has a system of risk rating in place, based on which it determines the lending rate. The system is transparent .The rate would depend on the borrower's rating category and the rate difference the best and poorly rated units would be roughly around 3.5 percentage points. Low rating means higher interest, the banker said. He further stated that where the borrowing limits exceeded Rs 5 crore, the account was rated by an external rating agency as well. But the Bank does not go only by the external agency rating.(BL 09102010)