Deposit rates, EMIs to come down

SBI, HDFC Bank and ICICI Bank cut base rate applicable from April 10; others may follow suit

If one is an existing borrower or looking for a loan, there's reason for cheer. Following the policy, some of the country's biggest lenders, State Bank of India (15 basis points or bps), HDFC Bank (15 bps) and ICICI Bank (25 bps) have announced base rate cuts applicable from April 10. Other banks are expected to follow suit.

For the borrower, it means that if a person took a Rs 50-lakh home loan recently at an interest rate of 10.15 per cent for 20 years before the rate cut, the equated monthly instalment (EMI) worked out to be Rs 48,749. After the revision of 15 bps, the EMI will reduce to Rs 48,251. This translates into yearly savings of approximately Rs 6,000. If the rate goes down by 25 bps, a new customer's EMI will be Rs 47,920 - an annual savings of Rs 9,950.

However, while borrowers will be happy, investors who prefer fixed deposits might soon see a rate cut as well which will reduce their returns. Several banks are planning to bring down their rates for one- and two-year deposits.