IDBI Bank hiked deposit rates by 50 basis points on deposits above nine months and slashed home loan fixed rates by 100 to 150 basis points a release issued by the bank said on Tuesday. Nine month rate is now 7.75% and ten year deposits are now 8.75%.
The floating home loan rates, however, remain unchanged at 11.25%. Speaking to FE the bank?s chief financial officer, OV Bansal said deposits rates were hiked because the card rates, i.e. the usual buckets of three months, six months, nine months, 12 months, 18 months etc were getting overshadowed by special term deposit schemes of 390 days or 500 days tailor made by competing banks.
When asked why the bank was reducing home loan fixed rate on the one hand and hiking deposit rates on the other, Bansal said that the bank?s fixed home loan rates were not reflecting current rates and it was only natural to streamline them.
?We are now comfortable with the new fixed home loan rates,?? he added.
Home loan seekers since the last 18months or so have shown preference towards fixed loan rates and many have migrated from floating to fixed rate home loans due to fears of a rising trend in rates.
Banks on the other hand kept fixed rate home loans at least 100 to 200 basis points higher than the floating rates as a cover against interest rate risks.
This being the case, IDBI Bank too kept fixed loan rates at 13.5%-14.75% for three and five year loans.
The rates are now revised downward to 12.5% and 12.75% for three and five-year home loans respectively.The signal emanating from hiking deposits rates across maturities upwards of nine months was to encourage depositors to invest in such schemes, bankers opined.