India's largest private lender ICICI Bank Ltd., on Friday cut interest rates payable on savings deposits as it follows both public and private sector peers in paring costs, becoming the eleventh bank to do so.
The Chanda Kocchar-led bank reduced the interest rate on savings deposits below Rs 50 lakh by 50 basis points to 3.5 percent per annum, according to its stock exchange filing. The rate on deposits worth Rs 50 lakh or above was kept unchanged at 4 percent.
Demonetisation in November last year had triggered a surge in bank deposits, which were expected to flow back into the system once the withdrawal limits were raised in March. However, deposits have proved to be sticky at a time when credit growth in the banking system is moderate and liquidity is ample. Banks have used this as an opportunity to bring down their costs of deposits.
The country’s largest lender SBI was the first to reduce the interest rate on savings deposits worth Rs 1 crore and below to 3.5 percent from 4 percent earlier. Axis Bank too said that it will offer 3.5 percent interest on savings accounts worth Rs 50 lakh and below compared with 4 percent earlier. A day ago, HDFC Bank and state-owned Punjab National Bank cut savings rates by a half a percentage point.
Other lenders like Bank of Baroda and Karnataka Bank also reduced the interest rates on some savings account deposits.
Among the newer private banks, Yes Bank said on Wednesday that it will offer 5 percent on savings deposits worth Rs 1 lakh and less, as compared with 6 percent earlier. For deposits between Rs 1 lakh and Rs 1 crore, it will continue to offer 6 percent. For deposits worth Rs 1 crore and above, Yes Bank will offer 6.25 percent, down from 6.5 percent earlier.
Kotak Mahindra Bank held the interest rate for low-value deposits while reducing the rate on savings deposits between Rs 1 crore and Rs 5 crore.