Post Demonetization Drive, Leading Banks Cut Deposit Rate After Prime Minister Narendra Modi directed that rates are on the way down, the State Bank of India cut bulk deposit rates by up to 1.9 per cent taking advantage of the surge in deposits following demonetization. Others including, ICICI Bank and HDFC Bank, have cut deposit rates by up to 25 basis points since the system is awash with liquidity. Bankers and analysts are anticipating a 25-50 basis points reduction in Repo rate by the Reserve Bank of India (RBI) in the monetary policy review. SBI has cut interest rates on bulk deposits which vary between Rs. 1-10 crore. The new rates will come into effect from today. With the reviewed interest rates, the 180-210 day fixed deposit is going to attract 1.90 per cent lower interest rate at 3.85 per cent as compared to the 5.75 per cent earlier. For fixed deposits between a year to 455 days, the rate has been reduced to 6 per cent from 4.25 per cent. For FDs between 7 days to 45 days, the new rate will be 1.25 per cent lower at 3.75 per cent. Previously this month, SBI had slashed fixed deposit rates for less than Rs. 1 crore on select maturities by up to 0.15 per cent. Arundhati Bhattacharya, State Bank of India chairperson asserted that nearly Rs.1.20 lakh crore has been deposited in the last 15 days after demonetization of high denomination notes. When asked about the effect of demonetization on the bank's performance, Ms Bhattacharya stated that about Rs. 1.20 lakh crore has been deposited by the public during the 15 days. When asked about the performance during this quarter, in regards to this sudden surge of deposits, she said the performance is going to be better and the bank would be doing good
business, since one-third of the total amount deposited after demonetization was in SBI. As of now, SBI share price tanked 0.68 per cent and is trading at Rs. 256.90. The stock opened at Rs. 257.80 against its previous closing at Rs. 258.65. ICICI Bank- ICICI Bank mentioned that for the fixed deposit between 390 days to 2 years, the interest rate has been cut by 0.15 per cent which came into effect fromWednesday. It will pay 7.10 per cent as against 7.25 per cent earlier. ICICI Bank share price skipped 0.92 per cent intraday on Thursday. HDFC Bank- Even, HDFC Bank has slashed interest rate by 0.25 per cent across all tenures on bulk deposits varying from Rs 1-5 crore. With the reviewed interest rates, the one-year fixed deposit is going to attract an interest rate of 6.75 per cent as against the 7 per cent earlier. For fixed deposits between â€˜3 years 1 day-5 yearsâ€™, the rate has been lowered to 6.5 per cent from 6.75 per cent. HDFC Bank share price showed marginal fall by 0.01 per cent.
Kotak Mahindra Bank- Furthermore, Kotak Mahindra Bank has reduced the interest rate on one-year FDs by 25 bps to 7 per cent, lower than 7.05 per cent offered by SBI. Kotak has also reduced rates on two- and three-year deposits by 50 bps each to 6.75 per cent. Following the trend, Kotak Bank share price is trading below 2 per cent.
After the demonetization drive which hit the market on Nov 8, banks have collected cash deposits of over Rs 4 lakh crore.
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Article Written by Madhurima Chowdhury