MUMBAI, Jan. 20 -- 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 1 January 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 s...