mumbai, Jan. 21 -- Punjab National Bank, or PNB, is preparing the ground for further deposit rate cuts as pressure on margins intensifies, betting that cheaper deposits are now the best way to protect profitability as earlier policy rate cuts have already pushed lending yields lower. The state-owned lender cut deposit rates by about 20 basis points (bps) across tenures effective January 1, 2026 and sees scope to go further, managing director and chief executive Ashok Chandra said. The reductions are expected to begin lowering PNB's cost of deposits from the March quarter, at a time when loan yields have fallen much faster than funding costs. "As of now also, hardly 80 bps rate cut has happened in any segment in our deposit. So there is still enough room. We will see how this situation pans out," Chandra told Mint, adding that the bank's asset-liability committee will assess the impact of the latest rate cut at the end of the month and then take a view on future deposit rate cuts. "(If the repo rate remains the same) we can definitely look for that," he said. The urgency comes from a visible squeeze on margins. PNB's domestic net interest margin fell to 2.65% in Q3FY26, down from 2.72% in the previous quarter and 3.09% a year earlier. While the domestic cost of deposits eased only marginally to 5.1% from 5.18% in the September quarter, yields on advances dropped more sharply to 7.8% in Q3 from 8.01% in the previous quarter and 8.5% a year ago. Chandra said deposit rate cuts had been limited so far because of a "dynamic" market environment and the need to balance depositor interests, but acknowledged that margin strain is now pushing the case for faster repricing. A series of rate cuts by the Reserve Bank of India (RBI) since February 2025, totalling 125 bps, including 25 bps in December 2025, has added pressure. Both public and private sector banks have cut deposit rates to varying degrees, depending on growth momentum and the composition of their loan and deposit portfolios. Weighted average rates on domestic term deposits fell to 6.8% in November 2025 from 7.2% in February 2025, latest RBI data showed. In response to the RBI rate cuts, PNB has trimmed deposit rates by about 80 bps so far....