Strain on NIM forces pvt banks to cut deposit rates

The country’s top three private lenders HDFC Bank, ICICI Bank and Axis Bank have slashed interest rates on retail term deposits across maturities, seeking to protect the net interest margin (NIM) which has been under stress for quite some time, due to slower loan growth and also to ease high cost of deposits, analysts said.

ICICI Bank, the largest private lender, reduced deposit rates by 50 basis points (bps) and the revised rates have been effective from Tuesday, the bank said on its website.

ICICI has cut rates across maturities ranging from 91 days to less than five years. It now offers a maximum 8.75 per cent interest on retail term deposits compared to 9.25 per cent earlier.

HDFC Bank also revised its deposit rates from Wednesday. The rates have been changed across maturities.

Axis Bank has also reduced its deposit rates by at least 25 bps from Tuesday. The move to cut deposit rates was not unexpected as industry observers have been expecting banks, both private and PSBs, to reduce deposit rates to protect their interest margin turfs following the State Bank of India paring down deposit rates by 50-100 bps last week.