After the RBI on Tuesday lowered the repo rate by 25 bps, Syndicate Bank on Friday cut the base rate by 25 bps to 10%. The new rate would be effective June 8, the bank said in a filing on BSE. The bank also lowered its Benchmark Prime Lending Rate (BPLR) from 14.50% per annum to 14.25%.
Following RBI governor Raghuram Rajan’s suggestion to pass on the rate cut benefits, several banks have lowered their base rates since Tuesday.
On Thursday, Central Bank of India had cut base rates by 30 basis points to 9.95%. Indian Bank has cut base rate by 30 bps to 9.95% effective June 8. According to media reports, Andhra Bank, too, has decided to cut base rate by 25 bps to 10% effective June 11.
On Tuesday, four banks had announced rate cuts. State Bank of India had reduced base rate by 15 bps to 9.70%, Allahabad Bank by 30 bps to 9.95%, Punjab & Sindh Bank and Dena Bank by 25 bps each to 10%, on Tuesday. Bank of Maharashtra had cut base rate by 25 bps to 10% few days before the policy.
On other hand, at least three banks have cut their deposit rates in last few days. Reduction in deposit rates comes despite government schemes such as Sukanya Samriddhi offering a better interest rate of 9.2%.
Axis Bank had cut deposit rates by 10 to 20 bps across tenures, Bank of Baroda by 25 bps and Oriental Bank of Commerce by 25 bps cut in last few days.
Deposits with banks grew 11.42% in FY15, with the outstanding amount reported at R85.86 lakh crore, the lowest growth since 1961. In the same period, most public sector banks saw deposits growing 14% while private banks saw an increase in the range of 8% to 22%.
However, with all these measures to cut deposit rates, there were not many base rate cuts in the early part of the year. The RBI cut the repo by another 25 bps in March.
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