After the Reserve Bank of India announced cuts its key policy rates on Friday, banks started reducing their deposit rates within hours of the announcement.
Amongst the public sector banks, Union Bank and Bank of Baroda were amongst the leaders to announce a reduction in their deposit rates ranging between 25 and 75 basis points across various maturities. This will also allow them to lower their lending rates.
Last time around, banks announced a reduction in both deposit and lending rates effective 1 January 2009 simultaneously after the last monetary policy announcement in the first week of December, since the RBI's move was well anticipated.
Punjab National Bank was also reported to have anticipated the rate cut when it announced a reduction in deposit and lending rates earlier in the week. PNB reduced deposit rates by 100 bps to 8.5 per cent, and its prime lending rate by 50 bps to 12 per cent, which is said to be amongst the lowest among the major banks.
Syndicate Bank has also announced that it will reduce its BPLR by 75 basis points to 12.50 per cent from 17 January. According to a statement issued over the weekend, the bank had revised the interest rates on domestic term deposits of less than Rs1 crore effective 5 January, 2009.
Dena Bank also announced a 75 bps cut in its PLR effective 1 January, with its PLR now standing at 12.75 per cent.
ICICI Bank announced a cut in its benchmark lending rates and its floating reference rate by 50 basis points each for the existing as well as new customers, though it continues to have the highest PLR among banks at 16.75 per cent.
Allahabad Bank has also announced that it would reduce its benchmark prime lending rate by 75 basis points to 12.50 per cent effective from 5 January.