Bank News
Following the country’s largest
lender State Bank of India (SBI), Banks have begun to cut interest rates on
deposits. On Thursday, two large private lenders - ICICI and HDFC Bank -
did so by 15-25 basis points (bps) in different maturity buckets.
HDFC Bank reduced the rate on term deposits above Rs 1 crore by 25
bps across categories. The decision reflects a rise in deposits, banking
sources said.
ICICI Bank reduced the rate on term deposits by 15 bps
for the maturity bucket of 390 days to two years. The new rate is 7.1%.
At IDBI Bank, the panel which
decides on interest rates is meeting on Friday. The money flowing into accounts
(savings and current) after the decision to scrap Rs 500, Rs 1,000 notes as
legal tender has been huge. What do we do with the surplus liquidity?” asked a
bank senior.
Bankers said rates are expected to
reduce by up to 50 bps over the next few months. SBI had decided to cut by 15
bps on term deposits between one year and three years.
Public sector bank executives said
more rate cuts – on deposits and subsequently on loans – are in the offing. SBI
has an excess statutory liquidity ratio of 5.5 percentage points
over the minimum required. According to Reserve Bank of India (RBI) data, Banks
parked Rs 2.48 lakh crore with the central bank at the reverse repo window on
Wednesday, and Rs 1.80 lakh crore a day before.
Deposits have grown by 9.8% in the
12 months till October-end, at Rs 99,839 crore. The growth in the earlier 12
months was 10.5%, said RBI.
