SBI cuts deposit rates by 15 basis points

AXIS Bank reduces MCLR lending rate by up to 20 basis points

Even as huge amount of cash pouring into bank accounts, the country’s largest lender State Bank of India (SBI) has decided to cut interest rates by 15 basis points (bps) on term deposits between one and three years.
 
SBI officials  said there could be  more rate cut on deposits and loans. Meanwhile, private sector lender Axis Bank slashed its marginal cost of fund-based lending rate (MCLR)  to price by up to 20 bps, in keeping with its stance to pass on the benefits of reduction in cost to customers.
 
The bank reduced its MCLR by 15 bps across all tenors up to one year and by 20 bps for two and three year years tenure.
 
The MCLR cut will be applicaple from 18 November. Elaborating the rationale behind deposit rate cut, SBI senior executives said the bank was seating on excess statutory liquidity ratio (SLR) of 5.5 per cent over minimum required by rules. It is not only because of large inflow of money into the banks after the Centre’s decision to scrap currency notes (Rs 500, Rs 1,000 ) as legal tender.
 
Slow credit growth is also a reason for the cut. So, there are challenges of deploying money. When a bank invests these excess funds intobond markets, returns are less as yields have fallen, a SBI executive said.
 
SBI’s deposit base grew by 13.76 per cent to Rs 18,58,999 crore and it raised the guidance for deposit growth to 15-15.5 per cent, from 13.5 per cent. This revision comes on the back of a surge in money deposited in current and savings accounts (CASA) after the government scrapped Rs 500 and Rs 1,000 notes as legal tender.
 
The bank’s gross advances rose by 8.11 per cent to Rs 14,81831 crore. While retail credits — home, personal and vehicle loans — grew by 20.4 per cent to Rs 3,50,465 crore, loans to small enterprises shrunk by six per cent to Rs 1,66,052 crore.