New Delhi: Flush with funds, Punjab National Bank (PNB) on Saturday trimmed interest rate on fixed deposits by up to 0.25% in line with competition.

Earlier this week, market leader State Bank of India (SBI) slashed deposit rates by 0.15%.

The bank has reduced interest rates in select maturities by 10-25 basis points on term deposits, PNB said in a statement.

PNB has got deposits of Rs47,000 crore ever since Prime Minister Narendra Modi on 8 November surprised citizens by announcing demonetisation of 500 and 1,000 rupee notes.

Besides, the bank has cut deposit rates on high value bulk deposits by 15-50 basis points.

The new rates would be effective from November 23, it said.

“The current account and savings account (CASA) has surged...the lowering of deposit rates will have impact on the lending rate going forward," PNB managing director Usha Ananthasubramanian said.

Earlier this week, SBI had reduced fixed deposit rates on select maturities by up to 0.15% prompting others to follow suit.

Other banks including ICICI Bank, HDFC Bank and Canara Bank announced lowering of deposit rates.

The lowering in fixed deposit rates may herald reduction in lending rate as well in the next few days.