State-owned Punjab National Bank today raised interest rates on fixed deposits of select maturities by up to 1.25 per cent.

"...The Bank has decided to realign the interest rates with the prevailing market rates and accordingly the rate of interest on single domestic term deposit of less than Rs 1 crore has been revised from 7.50 per cent to 8.75 per cent for maturity period of 180 days to less than one year ," it said in a filing to the BSE.

The revised rates will be effective from March 1, 2013, it added.

For senior citizens the bank has reduced the additional rate of interest rate to 0.25 per cent from existing rate of 0.50 per cent.

State Bank of India (SBI), the largest bank of the country, on Wednesday increased in interest rate on fixed deposits by 0.25 per cent on select maturities.

Shares of Punjab National Bank were trading at Rs 792.85 apiece on the BSE during the afternoon, up 0.63 per cent from its previous close.