Mumbai, Jan. 4: Bank of Baroda (BoB) today took the lead among other banks to announce about 50-75 basis point reduction in its deposit rates. Lending rates for loans up to Rs 2 lakh have also been brought down by half a per cent.
BoB has brought down interest rates on long-term deposits for various maturities by half a per cent effective from January 10. Accordingly, the interest rates for deposits for one year and above would now be at 5.50 per cent.
The bank has also decided to realign interest rates for other maturities. The interest rates have been revised to 4.50 per cent from 5.25 per cent for deposits between 15 to 45 days. Similarly, deposits between 91 days to 180 days and 181 days to less than one year have been brought down to 5.25 per cent from 5.50 per cent and 5.75 per cent, respectively.
Banking circles note that other nationalised banks are likely to announce deposit rate cuts over the next week. The reductions follow the lower interest rate regime in the country seen by slumping yields on government securities. Yield on the benchmark 10-year security had, earlier this week, plummeted to a record low of 5.98 per cent.
A major factor responsible for lower interest rate is the monetary and credit policy announced by the RBI on October 29 where it brought down the bank rate, cash reserve ratio and repo rate. The money market is further anticipating a 25.75 basis point cut in repo rate by the end of this month.
Interest rates on deposits between one year to less than two years, two years to less than three years and three years and above will now be 5.50 per cent for the depositor against the earlier 6 per cent.
The rate for seven to 14 days has been maintained at 4.25 per cent. However, a minimum deposit for this maturity range should be Rs 15 lakh.