Mumbai: India’s largest private sector lender ICICI Bank Ltd has reduced the interest rates on bulk deposits by 15-25 basis points (bps) across maturities, with effect from Tuesday, the bank said on its website.

A bps is one-hundredth of a percentage point, or 0.1%.

The interest rates on deposits with maturities between 91 and 184 days have been reduced by 25 bps to 6.75%, from 7% earlier. Similarly, the interest rate on deposits with maturities in the range of 271-330 days have been reduced by 15 bps to 7.25%, from the earlier rate of 7.4%.

The rate reductions are applicable on deposits worth ₹ 1 crore and above. The bank had reduced the interest rate on bulk deposits by up to 55 bps on 31 March.

ICICI Bank’s decision to reduce interest rates on bulk deposits comes on the back of improving liquidity conditions. In April, the Reserve Bank of India (RBI) said that it would move the system towards neutral liquidity compared to its earlier stance of maintaining a liquidity deficit in the system. The central bank is doing this through a mix of foreign exchange market interventions and bond purchases.

As liquidity conditions ease, banks will be more comfortable in dropping deposit rates. This, in turn, will allow banks to cut lending rates.

On Monday, State Bank of India (SBI) stated that it has reduced its marginal cost of funding-based lending rate (MCLR) by 5 bps, to 9.15%, leading to a commensurate drop in home and auto loan rates.

Starting 1 April, banks have been asked to set their minimum lending rates based on their marginal cost of funds rather than their average cost of funds.

Subscribe to Mint Newsletters * Enter a valid email * Thank you for subscribing to our newsletter.

Share Via