ICICI, HDFC Bank slash interest rates on bulk deposits by 0.25 per cent

Leading private sector lenders ICICI Bank and HDFC Bank have reduced rates by up to 0.25 per cent on high-value fixed deposits, which may be a precursor to reduction in lending rates as borrowing costs will come down.

ICICI Bank cut interest rates for deposits of more than Rs 1 crore by 0.25 per cent from Monday, a senior bank official confirmed. Fixed deposit rates of maturity between 121 and 150 days have been revised downward to eight per cent from 8.25 per cent earlier.

Term deposits of the country's largest private lender between 61-90 days for high-value fixed deposits of more than Rs 5 crore and above has been lowered to eight per cent from 8.25 per cent. Similarly, term deposits between 91 and 120 days would get a lower interest rate of eight per cent.

HDFC Bank, the country's second-largest private sector lender, too lowered its rates for fixed deposits of over Rs 5 crore and above effective Sunday.

Earlier in March, Axis Bank had reduced fixed deposit rates by up to 0.25 per cent across various maturities. Axis Bank was one of the first major lenders to slash its deposit offering after repo rate cut on March 4. The third-largest private sector lender has cut its deposit rate offerings by 0.25 per cent across buckets in the 18-36 month window, an Axis Bank official said. Similarly, for deposits up to 18 months, the rates have been decreased by 0.15 per cent to 8.50 per cent. With easing liquidity conditions and the low credit off-take, Axis Bank was among the few which cut its base rate, or the minimum rate of lending, last October by 0.10 per cent.

The Reserve Bank of India (RBI) indicated a shift in its stance after getting a grip over inflation and delivered a surprising 0.25 per cent cut in January and followed it up with a similar move on March 4 indicating its comfort with the Budget announcements.

Following these moves, the repo rate at which the Central bank lends to the system, currently stands at 7.75 per cent. While banks claim the policy moves generally take time to get transmitted into actual lending rates, the RBI has been unhappy with them for not passing the benefits of the rate cuts to borrowers.

FIXED DEPOSIT RATE REDUCTION

>> ICICI Bank cut rates for deposits over Rs 1 crore by 0.25% effective Monday

>> Fixed deposit rate of maturity between 121 and 150 days has been revised downward to 8% from 8.25%

>> Term deposits between 61 and 90 days for high-value fixed deposits of more than Rs 5 crore and above has been lowered to 8%

>> Similarly, term deposits between 91 and 120 days would get a lower interest rate of 8%

>> HDFC Bank too lowered its rates on fixed deposits of over Rs 5 crore and above effective Sunday

>> Earlier this month (March), Axis Bank had reduced fixed deposit rates by up to 0.25% across various maturities