Faced with mounting pressure to reduce lending rates and to counter slack credit offtake, banks have begun driving down bulk deposit rates.
Rates on Certificates of Deposits dipped by 100 basis points in one week. On April 1, two banks - Punjab National Bank and the Canara Bank - raised funds through 12-month CD floats at yields of 7 per cent. The banks mopped up Rs 1,200 crore in just one day.
Last weekend, public sector banks (PSBs) had raised 12-month CD funds at rates as high as 8 per cent.
Banking sources said the CD rate retreat was largely because PSBs had little requirement for bulk funds. This was largely on account of the slowdown in credit offtake. Credit offtake for the last financial year was barely 14 per cent. In the previous year, credit offtake had grown by 17 per cent. Non-food credit growth was just about 12.30 per cent, as against 18.5 per cent the previous year. With the onset of the lean season, the sources said, few expected any major credit offtake increases.
Rates on Certificates of Deposits dipped by 100 basis points in one week. On April 1, two banks - 
