For the third time in a month, Bank of India (BoI) today announced a cut in deposit rates. The Central Bank of India also announced a similar cut.
BoI is cutting interest rates on domestic term deposits, non-resident external (NRE) and non-resident non-repatriable (NRNR) deposits by 25 to 75 basis points with effect from September 3.
Central Bank of India has announced a 50 basis points cut in rates on domestic term deposits in certain maturity slabs.
The move to slash deposit rates is to protect spreads in the wake of falling yields on the benchmark government securities. Banks are competing with each other to offer loans at sub-prime lending rates to blue-chip corporates.
Prominent banks that have slashed interest rates recently include State Bank of India and Bank of Baroda.
BoI has cut interest rate by 25 basis points on deposits (of less than Rs 15 lakh) falling in the 15 to 30 days, 91 to 179 days, one year to less-than-two-years maturity buckets to five, six and eight per cent, respectively. The bank has left rates unchanged on deposits falling in the 31 to 45 days and 180 days to less-than-one-year maturity slabs at 5.25 per cent and 6.75 per cent, respectively.
The bank has cut interest rates by 50 basis points on domestic term deposits falling in the 46 to 90 days and three years and above maturity buckets to 5.50 per cent and 8.50 per cent, respectively. It has slashed rates for deposits falling in the 2 years to less-than-three-years bracket by 75 basis points to 8.25 per cent, according to a bank press release.
Central Bank of India has decided to slash by 50 basis points interest rates on domestic term deposits (of up to Rs 15 lakhs) in the 30 to 45 days (to 5 per cent), 91 to 179 days (6 per cent), two years to less-than-three-years (8 per cent) and three years to less-than-five-years (8.50 per cent) maturity slabs. For deposits of five years and above the new rate is 8.50 per cent as against the existing 8.75 per cent. The bank, which is effecting the rate cuts from September 1, has left interest rates in the other maturity slabs unchanged.
BoI had on August 1 revised downwards interest rates by 50 basis points on domestic term deposits in the five maturity slabs up to one year. Then, on August 27, it slashed interest rates on domestic deposits of up to Rs 15 lakhs by 25 basis points to 8.25 per cent on deposits in the one year to two years slab by 50 basis points to 9 per cent.
While BoI has cut interest rates on NRE and NRNR deposits by 25 to 75 basis points across various maturities, the Central Bank has revised downwards the interest rates on FCNR (B) US dollar deposits in the one year to two year slab from 3.75 per cent to 3.50 per cent.
