Demonetisation: ICICI, HDFC Bank cut deposit rates by 0.25%

Lowering deposit rates may herald reduction in lending rate as well in the next few days

Faced with liquidity comfort, major lenders, including ICICI and HDFC Bank, on Thursday lowered fixed deposit (FD) rates by up to 0.25% in view of surge in deposits following the demonetisation.

The lowering in FD rates may herald reduction in lending rate as well in the next few days.

For fixed deposit between 390 days to 2 years, the banks has lowered the interest rate by 0.15% effective on Wednesday, ICICI Bank website showed.

ICICI Bank will pay 7.10% as against 7.25% earlier.

Meanwhile, HDFC Bank has reduced interest rate by 0.25% across all tenures on bulk deposits ranging between Rs 1-5 crore.

The new rates are effective on Thursday, according to HDFC Bank website.

With the revised interest rates, the one-year fixed deposit will attract an interest rate of 6.75% as against the 7% earlier.

For fixed deposits between '3 years 1 day-5 years', the rate has been lowered to 6.5% from 6.75%.

On Wednesday, the country's largest lender State Bank of India (SBI) slashed fixed deposit rates on select maturities by up to 0.15%.

Private lender Axis Bank has cut marginal cost of fund-based lending rate (MCLR) by 0.15-0.20%.

Till Wednesday, SBI collected Rs 1,14,139 crore in deposits over the last seven days after the government announced to scrap Rs 500 and Rs 1,000 notes.

According to estimates, banks have collected cash deposit of over Rs 4 lakh crore following the demonetisation decision announced on November 8 by Prime Minister Narendra Modi.