Deposits for maturity of 271 days and less than one year will now fetch a rate of 8.50%, a cut of 25 bps. For terms of 46-90 days and 30-45 days, rates have been cut by 25 bps and now stand at at 7% and 6.25%, respectively. Short-term deposits of 7-14 days and 15-29 days will fetch 6% interest, up from 4% and 4.5%, respectively. The new rates will be effective from October 10.
PNB CMD KR Kamath told FE that the bank is leaving retail deposit rates unchanged at 9% for the maturity period of one year, so as to give a reasonable rate of return to depositors.
However, if lending lags, the bank may revise retail deposits at the end of the month. Whatever liquidity and interest management you need to do, it is done above R1 crore, Kamath said.
He said the R1-10-crore bracket constituted about 25% of the bank's deposits and the rate change will have a positive impact of 10 bps on the net interest margins (NIMs). Slowing credit growth may prompt other banks as well to trim rates to better manage their assets and liabilities. SBI chairman Arundhati Bhattacharya recently told FE that loan rates for companies had been lowered by most banks and that the lender had excess liquidity with not enough demand to match. The reason for the revision is that we have a lot of liquidity, we have not seen that kind of credit demand and, therefore, this is basically an adjustment of our asset-liability management (ALM), said Bhattacharya.
SBI had last revised its term deposit rates in July when it cut bulk term deposit rates by 25 bps.