ICICI cuts deposit rates

ICICI Bank, the country's second-largest bank, today reduced interest rates on its special deposit scheme by 50 basis points to 9 per cent. The decision comes close on the heels of State Bank of India (SBI) lowering the interest rate on its special deposit scheme by 25 basis points to 9 per cent.

ICICI Bank revised interest rates on the 390-day, 590-day and 890-day deposits to 9 per cent as against 9.5 per cent offered earlier with effect from October 15, 2007. "In the last three months the liquidity in the system has eased, hence we decided to reduce the rates on the special deposits,'' said a senior ICICI Bank official.

Taking cue from the country's largest bank, ICICI Bank has already slashed the interest rates on floating rate home loans by 50 basis points to 11 per cent and other retail loans by 25-50 basis points for new borrowers. While SBI reduced interest rates on new home, car, truck and farm equipment loans by 50 to 200 basis points from October 8 as a special offer up to December 31 this year.

SBI has cut the interest rate on home loans by 50 basis points with repayment tenures of up to 5 years and by 100 basis points for loans with repayment tenures of over 5 years to 15 years and by 75 basis points for up to a 20-year period.

The interest rate cuts came soon after the October 5 meeting between Finance Minister P Chidambaram, chief executives of large banks and representatives from automobile and other industries on ways to boost sagging demand. Chidambaram had then urged the banks to reduce interest rates in interest-rate sensitive sectors.