SBI, IDBI, Yes banks slash deposit rates by 25 to 75 basis points

State Bank of India (SBI), country’s largest lender slashed its deposit rates by 25 to 75 basis points on various slabs. IDBI Bank and Yes Bank following the suit also slashed the deposit rates by 25 to 75 basis points across various maturities. It is expected more banks will be revising their deposit rates in line to these banks.

SBI has reduced its deposit rates by 40 to 50 basis points on various slabs. Bank has cut interest rates by 40 basis points to 8.10 per cent on deposits for a period of one year to two years. While on deposits for any length of time between two years and 1,000 days bank is offering an interest rate of 8.5 per cent against 9 per cent earlier.

Likewise on the deposits above 1,000 days and less than three years bank has cut by 50 basis points to 8.25 per cent. According to bank sources the new rates will be effective from March 9.

IDBI Bank has also announced cut in its deposit rates for one-to-three years, 1,100 days and more than three years up to 10 years by 25-50 basis points. The new rates will be applicable from March 6.

C S Jain, head of retail at IDBI Bank explained, “We have brought down deposit rates to reduce the cost of resources. Even after this revision, our rate structure would remain attractive compared to other banks”.

Private sector lender Yes Bank has reduced deposit rates across maturities by 25-75 basis points. Interest rates on deposits with tenures of more than a year up to two years were lowered by 75 basis points to 9.25-9.50 per cent, depending on the amount deposited.

Likewise, the deposit rates of more than two years time period have been reduced by 25 basis points. Therefore, the new rates range between 8.75 per cent and 9.25 per cent, depending upon the deposit amount.

IDBI bank has also reduced the lending rates of its floating home loan rates by 50-100 basis points. Now the new floating interest rate will be 9.75 per cent for loans up to Rs 20 lakh and 10.25 per cent for loans above Rs 20 lakh. The new rates will come into effect from March 3.

However for loans up to Rs 30 lakh, IDBI Bank has cut down the margin money from 20 to 15 per cent. Also, for loans above Rs 30 lakh, the margin money has been reduced to 20 per cent from 25 per cent.

On Friday Reserve Bank of India (RBI) Governor Duvvuri Subbarao held a meeting with the bank chiefs to discuss the interest rate scenario. The central bank mainly pushed the private sector lenders to reduce loan rates as they have so far cut down interest rates by only 50 basis points. The public sector banks have reduced rates by up to 200 basis points.

After the meeting on Saturday some banks such as Punjab National Bank (PNB) and Union Bank of India reduced home and auto loan rates.

PNB announced cut in car loan rates by 50 basis points, Union Bank slashed rates on home loans by 25-100 basis points and car loans by 125-150 basis points. A Union Bank executive explained, “Our deposit rates are the lowest in the market at around 8 per cent, so there is little scope for further reduction”.

Earlier SBI has freeze home and auto loan rates at 8 per cent and 10 per cent respectively for a year.

C S Jain, head of retail, IDBI Bank notify, “We have cut deposit rates to reduce the cost of resources. Even after this revision, our rate structure would remain attractive compared to others”.