Deposit Rates Pared Faster Than Plrs

Banks have dropped interest rates on deposits at a greater speed and intensity in contrast to their lending rates. Banks dropped deposit rates by 100 to 200 basis points over nearly one and a half years. In contrast, there was only a marginal decline in the prime lending rates (PLR) of commercial banks.

The PLRs of public sector banks dropped by 50 basis points compared with the softening of the long-term deposit rates by 150-175 basis points during 2001-02.

As on March 2002, the PLRs of public banks ranged between 10 per cent and 12.5 per cent against 10-13 per cent in March 2001.

 

During the first quarter of fiscal 2003, even as many banks slashed deposit rates, their PLRs remained steady, the RBI stated in its annual report. The banking regulator further acknowledged: