"The bank has cut its deposit rates by 25 basis points across buckets in the 18-36 months tenure," a banker familiar with the matter said. "Interest on deposits for less than 17 months has been reduced by 15 basis points to 8.50%," he added. The bank has also reduced interest rates on bulk deposits of Rs 5 crore and above by 10 basis points across maturity.
The new rates will be effective from March 11. "In the first quarter we will see deposit rates softening, which would bring down cost of funds for banks," Srinivasan Varadarajan, executive director of Axis Bank had said on March 4.
"This would bring down lending rates," he had said. The private sector lender had cut its base rate, the minimum lending rates, in October last year by 10 basis points to 10.15%. RBI governor Raghuram Rajan has been critical of bankers not transmitting lower interest rates to consumers despite lower money market rates.
Bankers are of the view that the lending rate in the system would come off with a lag once interest rates on bank deposits come down, bringing down their cost of funds. State Bank of India, the country's largest lender, had earlier indicated that it would be very difficult to have a cut in lending rates till the end of March. Earlier this month, HDFC Bank reduced its deposit rate offering by 25 basis points on bulk deposits between Rs 1 crore and Rs 5 crore
Source : Economic Times