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Top private lenders ICICI Bank and HDFC Bank have cut deposit rates by up to 0.25 per cent (25 basis points) on high value fixed deposit on select maturities, a move cited as a herald to cut lending rates for borrowers.
The interest rates have been revised downwards for deposits over Rs 1 crore by 25 bps by largest private lender ICICI Bank effective March 30.
Fixed deposit rate of maturity between 121-150 days has been revised downward to 8 per cent from 8.25 per cent earlier.
For high value or bulk deposits over Rs 5 crore, term deposit of ICICI Bank on tenures between 61-90 days has been lowered to 8 per cent from 8.25 per cent.
Similarly, for term deposit between 91-120 days would attract lower interest rate of 8 per cent, according to reports.
On similar lines, the second largest private lender HDFC Bank has reduced interest rates by 25 bps on deposits between Rs 1 to 5 crore bracket in tenures of 1-2 years, 2-3 years and 3-5 years.
From April 1, the effective rate of interest will be 8.50 per cent from 8.75 per cent across the above mentioned tenures, an official said on the condition of anonymity.
Earlier this month, Axis Bank was the first big bank to reduce its deposit rates after the central bank cut key policy rate on March 4 by 25 bps to 7.50 per cent.
Axis Bank slashed its fixed deposit offering by up to 0.25 per cent across various maturities. The third largest private sector lender had cut its deposit rates by 0.25 per cent across buckets in the 18 to 36 months window. Similarly, for deposits up to 18 months, the rates were decreased by 0.15 per cent to 8.50 per cent.
Post the RBI’s reduction of repo rate by 50 bps since January, except two banks (Union Bank of India and United Bank of India) banks have not passed on the cut in their base or lending rates.
While bankers claim the policy moves generally take time to get transmitted into actual lending rates, the RBI has been unhappy with the rate cut benefits not passed on to the borrowers.
Also, bankers suggest it is not a cut in high cost deposits but a cut in retail deposit rates that could trigger a lending rate reduction.
The country’s largest lender, State Bank of India chief also indicated that it would be very difficult to have a cut in lending rates till the end of March, which is generally the busy season for credit pick up.
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