Small finance banks to lower deposit rates as pressure on margin mounts

However, despite the reduction, their interest rates would be about 50-100 basis points higher than those of banks

Small finance banks, which have been defying the trend of cheap money and are offering as much as nine per cent interest on deposits, are now falling in line and reducing interest rates.

ESAF, Suryoday, Capital Local Area Bank and Fincare Small Finance Bank are a few of these banks planning to reduce interest rates on deposits by 25-50 basis points in the next one month. Many small finance banks are increasingly facing stress on their margins because of non-payment of dues following last year’s demonetisation. 

However, despite the reduction, the interest rates offered by these small finance banks will