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L.N. Revathy

Coimbatore, Nov. 11 As home loan borrowers, traders, SMEs and corporates await with some eagerness the announcement of a cut in lending rates, senior citizens and those averse to investing in stock market are now seen rushing to banks to beat the low rate regime.

Anticipating a cut in deposit rates any time now, they are seen parking their funds in bank deposits, particularly in the 400 days/ one to three year tenure as the rates in that time bucket seem attractive. The average interest rate on such deposits is in the region of 10.50 per cent to 11 per cent. An extra 0.5 per cent is given for senior citizens.

Branch heads of old private banks such as City Union Bank and Karur Vysya Bank admit to the brisk collection the past week.

While the collections varied from branch to branch, bankers say that the rise could be of the order of 3 to 5 per cent compared to the earlier week’s mop up.

Are they rolling back such deposits or warding off customers by saying ‘forms not available’?

’We have no information yet on the roll back of specific deposit products. Forms are available and people are trying to get the best bargain in the present day scenario,’ the branch head of a scheduled commercial bank, preferring anonymity said.

How long can banks continue to offer these lucrative rates?

‘We will start cutting the rate only after we have a cushion in our kitty,’ says the Executive Director of City Union Bank, Mr N Kamakodi.

CUB, according to him, has not registered a major reduction or spurt on the deposit mobilisation front. ‘Retail deposits (those less than Rs 15 lakh) have increased 15 to 20 per cent during the first half of the current fiscal compared to the last. During the same period, some bulk deposit repayments have also taken place. The flow has been smooth,’ he said.

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