Mumbai, Sept. 12: Three of the country’s largest private sector banks today brought down their deposit rates, following the footsteps of the largest lender — the State Bank of India.
ICICI Bank, HDFC Bank and Axis Bank today announced cuts in deposit rates by 25-50 basis points. Banking circles say the reduction in interest rates on term deposits is a consequence of adequate liquidity in the system.
Lower deposit rates have already resulted in a slowdown in deposit growth. Data from the Reserve Bank of India showed that deposits with banks grew 14.12 per cent to Rs 6,29,170 crore as on August 24. In the previous fortnight, deposit growth was higher at 14.53 per cent. This number is also lower than the 16 per cent projected by the central bank for the year.
ICICI Bank today said it had lowered interest rates of retail fixed deposits by half a percentage point for tenures ranging from 91 days to less than 5 years with effect from September 11. The bank added that it had also rationalised the interest rate on retail fixed deposits of tenure up to 45 days. The private sector lender now offers a maximum 8.75 per cent interest on deposits as against 9.25 per cent earlier.
HDFC Bank also altered interest rates for maturities ranging from six months to five years. The bank now offers a maximum interest rate of 8.75 per cent interest on its retail term deposits. Axis Bank has also reduced its deposit rates by at least 25 basis points.
Earlier this month, the SBI brought down the interest rate on term deposits by 50-100 basis points after it cut lending rates on car and home loans. The bank slashed interest rates by 50 basis points for most of the maturity buckets. However, for deposits between 241 days and one year, the downward revision was much stronger at one per cent and consequently the new rate was revised to 6.5 per cent against 7.5 per cent earlier.
Experts aver that though banks have cut their deposit rates, this can be only done up to a point as there are other avenues available for the individuals to invest their money.