ICICI, HDFC Bank cut FD rates

A couple of days before RBI governor Raghuram Rajan decided to maintain a status quo in the monetary policy, the country's two largest private banks had quietly brought down deposit rates. Following the reduction, which is in select time buckets, both banks' best rates are now below 9%.

HDFC Bank has lowered its interest rates by up to 50 basis points on various maturities. Following the revision, the highest rate offered by the bank is 8.75% on deposits above one year. HDFC Bank's new fixed deposit rates are applicable from this week Personal Numerology Trading Tips

ICICI Bank has lowered its term deposit rates by 25 basis points. The bank offers 8.75% on deposits above 390 days. The revised rates have been applicable from November 28. SBI had reduced interest rates on the shorter end from November 1 by one percentage point to 5%.

In response to a query on why rates were revised ahead of the policy, an ICICI Bank spokesperson said: "ICICI Bank has reduced rates in select tenures of retail deposits given the improving liquidity environment and systemic trends."

Banks have been flush with liquidity as deposit growth continues to outstrip growth in advances. Bankers say that there is no fresh investment demand from corporates Commodity Trading Tips

A bond market dealer said: "There has been a sharp drop in interest rates in the money markets. Yields on the 10-year government bond had fallen to a 16-month low ahead of the policy and has fallen to below 8% following the policy announcement." A fall in money market rates is a pointer to a reduction in interest rates.

Although banks have been bringing down deposit rates, no bank has recently reduced its base rate — the benchmark rate which determines the pricing of most loans, including home loans. Bankers have said that they are waiting for a signal from the central bank that the downward movement is sustainable.

In his monetary policy, Rajan said that the reduction in money market rates not being passed on is a reflection of weak transmission. Following the policy, SBI chairman Arundhati Bhattacharya said that there was unlikely to be any change in the bank's deposit or lending rates Jackpot Trading Tips