New Delhi: The PSU banks are likely to slash the deposit rates on both retail deposits and bulk amounts (Rs 15 lakh and above) within a year. Some PSU banks have already cut the bulk deposit rates by 2 percentage points and may lower it further.
MBN Rao, CMD, Canara Bank told CNBC-TV18 that the bank is examining lowering deposit rates on retail deposits soon. He sees a 50 basis points reduction in deposit rates up to one-year. Corporate rates may also come down substantially.
"In respect of liability and deposit rates, sometime during the course of the week our Asset-Liability Management Committee, will meet and take a look at our deposit rate structure," said Rao.
However, he expects interest rates to be stable-to-soft in the near-term. "In case of the deposit rates up to one year, there maybe a 50 per cent reduction. The longer deposit rates especially the corporate rates may come down substantially compared to the peak levels; that we have seen before March. The rates or the bulk deposits have come down from the historical peak of about 12 per cent to around 9 per cent," he said.
Banks have been examining to lower deposit rates-as in the recent past, the inflation has come down and the inter-bank call money rates have been hovering low.
While the one-year deposit rates are likely to stabilise given that inflation is at fourteen-month low for the tenth consecutive week, the long-term interest rates on deposits are likely to show a bit of a downward movement, said Rao.
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