ICICI Bank, HDFC Bank & Axis Bank cut deposit rates
Sep 14 2012, 19:24 | By Moneycontrol.com
After a series of lending rate cuts, banks started slashing deposit rates to maintain their net interest margins. India's three largest private sector lenders ICICI Bank , HDFC Bank and Axis Bank slashed interest rates on retail term deposits by 25-50 basis points.
All the banks reduced rates across maturities in the range of six months to less than five years with effect from September 11 and 12. While ICICI Bank is offering a maximum rate of 8.75% in the tenure of 390 days to less than two years, HDFC Bank and Axis Bank, according to the respective websites are almost serving the same rate to stay competitive.
However, ICICI Bank hiked the interest rate on retail fixed deposits of tenure upto 45 days by 50-75 basis points. The bank is currently offering 4% on savings deposits. This move should enhance the attractiveness of very short term deposit schemes for 7-45 days. Companies or mutual fund houses may be lured by such an increase.
Last week, India's largest lender State Bank of India was the first bank to lower rates on retail term deposits by 50 bps. Following the reduction, the highest rate offered by the bank is at 8.5%, which can be availed on all deposits maturing between one and 10 years. Traditionally, any rate cut by SBI sets the benchmark for the entire banking industry.
Earlier, a slew of banks including SBI, Bank of Baroda, Central Bank of India, IDBI Bank had lowered lending rates but did not change their base rate, the benchmark rate below which banks are not allowed to lend.
ICICI Bank decreased its base rate by 25 bps to 9.75% in April immediately after the Reserve Bank of India had cut policy rate by 50 bps.
N.B. The rates are for deposits below Rs 15 lakh while it is below Rs 1 crore for HDFC Bank.
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