 "ICICI Bank, HDFC Bank cut retail term-deposit rates")
Two of India’s top private-sectors banks — ICICI Bank and HDFC Bank — have reduced interest rates on retail term deposits.
The move comes at a time when industry has been demanding that banks pare their lending rates to push economic activities and investments. Bankers have so far maintained deposit rates need to fall before they can cut lending rates.
ICICI Bank has reduced the interest rate on retail term deposits with maturity between 390 days and two years by 25 basis points to 8.75 per cent. The new rate is effective from November 28. Following this revision, the bank now offers a maximum of 8.75 per cent interest on term deposits of less than Rs 1 crore, instead of nine per cent earlier.
“ICICI Bank has reduced rates in select tenures of retail deposits, given an improving liquidity environment and systemic trends,” a spokesperson for the bank said in an e-mailed response to Business Standard's query on its decision to cut deposit rate.
HDFC Bank has also lowered its retail term deposit rates, by 25-50 basis points. The rate cut is effective from December 1 and is applicable on retail term deposits with maturity between 46 days and one year.
On Tuesday, Reserve Bank of India (RBI) Governor Raghuram Rajan had kept the key repo rate unchanged at eight per cent but held out hope for industry by saying the central bank could ease monetary policy early next year, if downward momentum in inflation continued and fiscal developments were encouraging.
Most lenders have ruled out the possibility of an immediate lending rate cut because of high deposit rates. “Regarding lending rate cuts, I think it will happen sometime towards the end of the first quarter... A few of the bigger banks are now beginning to cut their deposit rates. As and when that gets entrenched and deposit rates start trending downwards, we can see some kind of reduction in base rates (the minimum lending rate for banks),” State Bank of India (SBI) Chairman Arundhati Bhattacharya had said after Tuesday’s bi-monthly monetary policy review of the central bank.
SBI, India’s largest lender by assets, is one of the few banks that have reduced their retail term-deposit rates recently. The bank cut the interest rate on retail term deposits with maturity of seven days to 45 days by 100 basis points to five per cent, with effect from November 1. The lender had also reduced interest rates on retail term deposits with maturity of one year to less than three years by 25 basis points in September.
The move comes at a time when industry has been demanding that banks pare their lending rates to push economic activities and investments. Bankers have so far maintained deposit rates need to fall before they can cut lending rates.
ICICI Bank has reduced the interest rate on retail term deposits with maturity between 390 days and two years by 25 basis points to 8.75 per cent. The new rate is effective from November 28. Following this revision, the bank now offers a maximum of 8.75 per cent interest on term deposits of less than Rs 1 crore, instead of nine per cent earlier.
“ICICI Bank has reduced rates in select tenures of retail deposits, given an improving liquidity environment and systemic trends,” a spokesperson for the bank said in an e-mailed response to Business Standard's query on its decision to cut deposit rate.
HDFC Bank has also lowered its retail term deposit rates, by 25-50 basis points. The rate cut is effective from December 1 and is applicable on retail term deposits with maturity between 46 days and one year.
On Tuesday, Reserve Bank of India (RBI) Governor Raghuram Rajan had kept the key repo rate unchanged at eight per cent but held out hope for industry by saying the central bank could ease monetary policy early next year, if downward momentum in inflation continued and fiscal developments were encouraging.
Most lenders have ruled out the possibility of an immediate lending rate cut because of high deposit rates. “Regarding lending rate cuts, I think it will happen sometime towards the end of the first quarter... A few of the bigger banks are now beginning to cut their deposit rates. As and when that gets entrenched and deposit rates start trending downwards, we can see some kind of reduction in base rates (the minimum lending rate for banks),” State Bank of India (SBI) Chairman Arundhati Bhattacharya had said after Tuesday’s bi-monthly monetary policy review of the central bank.
SBI, India’s largest lender by assets, is one of the few banks that have reduced their retail term-deposit rates recently. The bank cut the interest rate on retail term deposits with maturity of seven days to 45 days by 100 basis points to five per cent, with effect from November 1. The lender had also reduced interest rates on retail term deposits with maturity of one year to less than three years by 25 basis points in September.
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