Fixed deposit rates: Banks eye RBI for cut

"We will take a call on the reduction of deposit rates after the mid-term policy," Executive Director of Vijaya Bank, Subhalakshmi Panse said today.

She said that the entire cost structure and overall deposit growth would be taken into account before reducing rates on fixed deposits.

Interestingly, deposit growth registered by Indian banking system fell short of RBI's target last financial year amid liquidity crunch faced by the lenders.

Last fiscal, banks' deposits grew 13.4 per cent to Rs 60.72 trillion in the year to March 23, below the RBI's projection of 17 per cent.

Country's largest lender, the State Bank of India, recently reduced fixed deposit rates by 0.25 percent in tenors upto 240 days.

Bankers said that mid-term policy review on June 18 will bring clarity on the cost structure of the banks and help them take a decision on FD rates.

"Basically, it depends on the fund management position of different banks," General Manager (Financial Management, IRC, Treasury & ID) of Dena Bank, Sudhir Kumar Jain said.

He also said that banks would factor in the availability of funds before deciding on reducing deposit rates.

Central Bank of India's chairman and managing director M V Tanksale and Corporation Bank's CMD Ajai Kumar had also opined that they would wait for the RBI move on June 18 to take a final call on

... contd.