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  1. Syndicate, Dena Bank cut rates on some fixed deposits

Syndicate, Dena Bank cut rates on some fixed deposits

Amid the surge in deposits resulting from the withdrawal of R500 and R1,000 currency notes, state-owned lenders — Dena Bank and Syndicate Bank —reduced interest rates on some fixed deposits to lower-than-the-comparable rates offered by State Bank of India (SBI), the largest lender.

By: | Mumbai | Published: December 24, 2016 6:13 AM

Amid the surge in deposits resulting from the withdrawal of R500 and R1,000 currency notes, state-owned lenders — Dena Bank and Syndicate Bank —reduced interest rates on some fixed deposits to lower-than-the-comparable rates offered by State Bank of India (SBI), the largest lender.

Dena Bank now pays 4% on one-year deposits of between Rs 1 crore and Rs 5 crore, as against SBI’s 4.25%. Till earlier this week, Dena Bank paid 5% interest on such deposits.

Syndicate Bank has slashed rates on retail term deposits of maturities between one year and three years by 25-50 basis points (bps), effective December 19. The rates of interest on one-, two- and three-year deposits with the bank now stand at 6.8%, 6.5%, and 6.5%, respectively. The comparable rates for SBI are 6.9%, 6.85% and 6.5%.

Banks have garnered deposits worth Rs 12.44 lakh crore between November 9 and December 10, according to the Reserve Bank of India (RBI).

Public-sector lenders are believed to have received a larger share of the deposits than their privately-owned peers because of their relatively larger branch network.

Banks had started cutting deposit rates even before the government’s demonetisation announcement, in the wake of the RBI’s 25-bps cut in the repo rate at its October 5 monetary policy review.

The withdrawal of high-currency notes has resulted in a further decline in the cost of funds with the banking sector.

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