MUMBAI: India’s largest public sector lender, State Bank of India on Friday announced a cut in retail deposit rates for maturities of over one year by 0.25 per cent. The move comes a day after the two private sector banks — ICICI Bank and HDFC Bank slashed their deposit rates by upto 0.50 per cent on maturities of up to one year. This according to a section of the industry indicates that the lending rates are going to fall in the coming months.
According to the new rates, which will come into effect from December 8, 2014, retail term deposits with tenure of one to three years would carry an interest rate of 8.50 per cent from the earlier rate of 8.75 per cent. Similarly, term deposits with a tenure of three to five years would fetch a return of 8.50 per cent while the interest rates on deposits with a tenure of above five years has been brought down to 8.25 per cent from 8.50 per cent.
“Our bank periodically reviews the liquidity position. Currently, the liquidity position is quite comfortable for the bank and therefore we decided to tweak a little bit on the retail term deposit rates,” said M. Geevarghese Vaidyan, deputy managing director, retail strategy, SBI. Mr Vaidyan added that the bank had seen a robust growth in deposits while the credit off-take has not seen a commensurate growth.
On asked whether SBI would slash its key lending rates in the coming days, he said, “The cut in lending rates is dependent on many factors and the bank would take a call on it separately. The cut in deposit rates should not be viewed as a precursor to the lowering of lending rates”.
Meanwhile, the country’s second-largest private sector lender HDFC Bank’s managing director Aditya Puri said that now that they have reduced FD rates, the base rate will be cut by March.
