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Deposit interest rate cuts likely to be moderate in current cycle

Elevated credit-deposit ratio, LCR norms may weigh on banks' decision

Deposit interest, rate cuts
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Additionally, the bank has revised the interest rate on its special deposit scheme, Amrit Vrishti, and withdrawn another special deposit scheme.

Anupreksha JainAbhijit Lele Mumbai

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The cut in deposit interest rates during the current easing cycle is expected to be moderate compared to the previous one because the highest cut in the policy repo rate is anticipated to be about 100 basis points (bps), as against 250 bps in the previous cycle. 
In addition, the credit-deposit (CD) ratio will remain elevated for major banks. Also, regulatory factors, such as the revised liquidity coverage ratio (LCR) norms and the potential increase in deposit insurance coverage, will weigh on lenders, thus limiting their ability to implement significant deposit rate cuts. 
The monetary policy committee of the Reserve

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