It is official: your chance to earn high interest rates on deposits is over. The top three private sector lenders in the country – ICICI Bank, HDFC Bank, and Axis Bank – have slashed the interest rates on retail term deposits across maturities.
The move is aimed to protect their net interest margin that has been under stress due to slow loan growth and high cost of deposits, bankers and industry analysts said.
ICICI Bank, the largest private sector lender in the country, pared deposit rates by 50 basis points. The revised rates are effective from Tuesday, the bank said on its website. The lender has cut rates across maturities ranging from 91 days to less than five years. It now offers a maximum 8.75% interest on retail term deposits compared to 9.25% earlier.
Rival HDFC Bank is not far behind and has revised its deposit rates from today. The rates have been changed for maturities ranging from six months 17 days to five years. The bank is also offering a maximum of 8.75% interest on its retail term deposits.
Axis Bank has also reduced its deposit rates by at least 25 basis points from Tuesday.
The moves hardly surprised the industry analysts as they have been expecting lenders to reduce their deposit rates to protect dilution in their interest margins.
Last week, State Bank of India (SBI), the largest commercial bank in the country had pared its deposit rates by 50-100 basis points. Analysts expect other state-run and private banks to mirror this move.
The net interest margin of banks has been under stress as the increase in cost of deposits has outpaced the rise in yield on advances in the past one year. As loan demand has remained largely muted so far this year the pressure on the margins is expected to intensify further.
| Bank | New Rates | Effective Date |
| ICICI Bank | 4.75 - 8.75 | 11-Sep-12 |
| HDFC Bank | 4.00 - 8.75 | 12-Sep-12 |
| Axis Bank | 3.50 - 9.25 | 11-Sep-12 |
Note: The new rates are applicable on deposits up to Rs 1 crore
Source: Banks
