BoI slashes rates for large fixed deposits

Contrary to expectations of a hike in interest rates, public sector lender Bank of India (BoI) today slashed rates by up to 75 basis points on fixed deposits of Rs 1 crore and above.

"The revised interest rates on Domestic Rupee Term Deposits of Rs 1 crore and above will be applicable for various periods on fresh deposits and on renewal of maturing deposits wef 15.04.2010, other rates remaining the same," the bank said in a statement.

For deposits of at least Rs 1 crore for one or two year maturity, the bank cut the rate to 6 per cent from 6.75 per cent, while for those with a maturity period of 2-3 years, the rates have been lowered from 6.75 per cent to 6.25 per cent, it said.

With inflation nearing the double digit mark, analysts expect RBI to further tighten its monetary stance in its annual policy on April 20 that may lead to a hike in both lending and deposit rates.

The Reserve Bank has already raised the cash reserve ratio or the amount banks have to park with the apex bank in its January policy review besides hiking its short-term rates by 25 basis points.

The state-owned Union Bank of India also recently hiked deposit rates by up to 0.5 per cent across various maturities.

Other banks are waiting for RBI policy to take a call on the issue.