Mumbai, March 4: Bank of Baroda (BoB) today became the first bank to bring down deposit rates after the budget. It cut interest rates on domestic term deposits by 25-75 basis points.
The bank said the cuts in deposit rates follow the Reserve Bank of India’s decision to bring down the interest rate on savings accounts last Friday by half a percentage point.
The central bank’s move came after the finance minister Jaswant Singh reduced the rates of interest on public provident fund (PPF) and small savings schemes by one percentage point in his budget. The cut became effective from March 1.
Many in the banking industry are predicting that BoB — which is also considering a cut in its lending rates — will be followed by several other banks in its move on the deposit rate front.
Most of the banks are expected to announce cuts in the range of 25-50 basis points in the days ahead. Officials of the country’s largest commercial bank, State Bank of India, have earlier said that though the bank is reviewing its deposit rates, any reduction may not be immediate.
As per the downward revision by BoB, deposits for up to Rs 15 lakh in the tenor 15-45 days would attract an interest of 4.5 per cent (earlier 4.75 per cent), the bank said in a statement today.
Similarly, the rate for deposits of 46-90 days, 91-180 days and 181 days to one year would now be 4.75 per cent from the earlier level of 5.25 per cent, 5 per cent from 5.5 per cent and 5 per cent (5.75 per cent), respectively.
Similarly, a rate of 5.25 per cent (6 per cent) has been fixed for deposits of one to three years, while interest rate on deposits for three years and above would be 5.5 per cent (6 per cent).
BoB said that in case of deposits above Rs 15 lakh, the revised rates would be higher by 0.25 per cent in all the maturity brackets compared with those offered for deposits below this amount.
Last month, BoB had raised the interest rates on certain categories of domestic term deposits by 0.25-0.50 per cent.