But hikes 180-210 day deposits by 20 bps; other banks maintains status quo
State Bank of India, the country’s largest lender, has reduced short-term bulk deposit rate by 200 basis points as liquidity in the banking system is becoming comfortable. However, it has raised the rate by 20 bps for a particular maturity, of 180 to 210 days.
“Our liquidity position is comfortable,” Arundhati Bhattacharya, chairperson, when asked the reason.
From Friday, SBI will offer 6.5 per cent for deposits of Rs 1 crore and above, for seven to 60 days maturity, as compared to 8.5 per cent offered earlier. On the rate rise in 180-210 day maturity, Bhattacharya said it was a part of liquidity management.
On Tuesday, the Reserve Bank of India (RBI) increased the repo rate by 25 bps to 7.75 per cent, to tame rising prices.
Liquidity in the banking system has eased considerably, with banks’ daily borrowing from RBI’s Marginal Standing Facility coming below Rs 10,000 crore from a high of Rs 1 lakh crore and above in September. On Wednesday, banks borrowed about Rs 9,000 crore from the MSF at 8.75 per cent.
Overall deposit growth in the banking system is, however, sluggish and lags credit growth. According to RBI data, credit growth was 17.7 per cent on a yearly basis till October 4, while deposits had grown 14.8 per cent.
RBI Governor Raghuram Rajan had also expressed concern over the slow pace of deposit mobilisation.
While SBI has altered the deposit rate, other banks are still in a wait and watch mode. “We are maintaining status quo. Any changes in rates will depend on liquidity,” said S S Mundra, chairman and managing director, Bank of Baroda.
Similarly, a senior Union Bank of India official said it would not revise deposit rates at this point.
BALANCING ACT
* Short-term bulk deposit rate cut by 200 bps
* Short-term bulk deposit rate raised by 20 bps for a particular maturity, of 180 to 210 days
* From Friday, the lender to offer 6.5% for deposits of Rs 1 crore and above for seven to 60 days maturity period
* Move after RBI increased the repo rate by 25 bps to 7.75%
“Our liquidity position is comfortable,” Arundhati Bhattacharya, chairperson, when asked the reason.
From Friday, SBI will offer 6.5 per cent for deposits of Rs 1 crore and above, for seven to 60 days maturity, as compared to 8.5 per cent offered earlier. On the rate rise in 180-210 day maturity, Bhattacharya said it was a part of liquidity management.
On Tuesday, the Reserve Bank of India (RBI) increased the repo rate by 25 bps to 7.75 per cent, to tame rising prices.
Liquidity in the banking system has eased considerably, with banks’ daily borrowing from RBI’s Marginal Standing Facility coming below Rs 10,000 crore from a high of Rs 1 lakh crore and above in September. On Wednesday, banks borrowed about Rs 9,000 crore from the MSF at 8.75 per cent.
Overall deposit growth in the banking system is, however, sluggish and lags credit growth. According to RBI data, credit growth was 17.7 per cent on a yearly basis till October 4, while deposits had grown 14.8 per cent.
RBI Governor Raghuram Rajan had also expressed concern over the slow pace of deposit mobilisation.
While SBI has altered the deposit rate, other banks are still in a wait and watch mode. “We are maintaining status quo. Any changes in rates will depend on liquidity,” said S S Mundra, chairman and managing director, Bank of Baroda.
Similarly, a senior Union Bank of India official said it would not revise deposit rates at this point.
BALANCING ACT
* Short-term bulk deposit rate cut by 200 bps
* Short-term bulk deposit rate raised by 20 bps for a particular maturity, of 180 to 210 days
* From Friday, the lender to offer 6.5% for deposits of Rs 1 crore and above for seven to 60 days maturity period
* Move after RBI increased the repo rate by 25 bps to 7.75%
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