 "SBI, Axis cut deposit rates; HDFC Bank may cut loan rate by March")
With ample liquidity in the system and tepid credit growth, State Bank of India and Axis Bank have cut their interest rates on retail term deposits by 25-75 basis points (bps).
HDFC Bank Managing Director Aditya Puri said: “I’ve reduced my fixed deposit rates and you will see by March or so, (our) base rate will come down.”
HDFC Bank’s base rate is 10 per cent. It was raised in November last year by 0.2 per cent. It had recently cut deposit rates by 0.25-0.5 per cent in various buckets, from 49 days to less than a year.
SBI has reduced deposit rates below Rs 1 crore on select maturities. It cut rates by 25 bps in three buckets. Those on tenures of a year to less than three years and from three years to less than five years will be 8.5 per cent, from 8.75 per cent earlier.
With tepid credit growth, banks have surplus money. SBI has excess liquidity of Rs 70,000 crore. It has been on a deposit rate cut mode since July, having reduced rates for short-term deposits (seven to 45 days) twice, by 100 bps each. It now offers five per cent rate for this maturity.
Asked about the trigger for another round of deposit rate cut, B Sriram, managing director (national banking group), SBI, said credit offtake was not expected to see any substantial traction till the end of the year. “There is a downward bias for deposit rates. The spate of cuts will bring down the cost of funds but it will take a while to reduce lending rates,” he said. SBI’s base rate stands at 10 per cent.
HDFC Bank Managing Director Aditya Puri said: “I’ve reduced my fixed deposit rates and you will see by March or so, (our) base rate will come down.”
HDFC Bank’s base rate is 10 per cent. It was raised in November last year by 0.2 per cent. It had recently cut deposit rates by 0.25-0.5 per cent in various buckets, from 49 days to less than a year.
SBI has reduced deposit rates below Rs 1 crore on select maturities. It cut rates by 25 bps in three buckets. Those on tenures of a year to less than three years and from three years to less than five years will be 8.5 per cent, from 8.75 per cent earlier.
With tepid credit growth, banks have surplus money. SBI has excess liquidity of Rs 70,000 crore. It has been on a deposit rate cut mode since July, having reduced rates for short-term deposits (seven to 45 days) twice, by 100 bps each. It now offers five per cent rate for this maturity.
Asked about the trigger for another round of deposit rate cut, B Sriram, managing director (national banking group), SBI, said credit offtake was not expected to see any substantial traction till the end of the year. “There is a downward bias for deposit rates. The spate of cuts will bring down the cost of funds but it will take a while to reduce lending rates,” he said. SBI’s base rate stands at 10 per cent.
Axis Bank, the country’s third largest private lender, also cut retail deposit rates, effective from Monday. It has reduced rates by 15-75 bps on deposits of less than a year. For those above a one-year term, rates have been reduced by 15-25 bps. The maximum it is offering on maturities is 8.9 per cent.
The moves are important as these are generally a precursor to a drop in borrowing rates.
The moves are important as these are generally a precursor to a drop in borrowing rates.
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