ICICI, HDFC Bank slash deposit rates by up to 50 bps

Two of the biggest private sector lenders ICICI Bank and HDFC Bank have effected a cut of up to 0.50 per cent in term deposit rates following tepid credit growth and ease in money market rates.

The moves come amid rising expectations of a lower rate regime. Reserve Bank Governor Raghuram Rajan had also expressed disappointment at banks for not cutting lending rates despite a steep fall in money market rates for many months.

ICICI Bank, the largest private sector lender, cut its deposit rate offering in the 390-days to two-year buckets by 0.25 per cent to 8.75, according to its website.

"ICICI Bank has reduced rates in select tenures of retail deposits given the improving liquidity environment and systemic trends," the bank spokesperson said.
HDFC Bank too cut its retail deposit rates by 0.25-0.50 per cent in the 46-days to under-one year bucket.

The reduction has been due to deposit growth outpacing credit growth, a drop in the money market rates and aligning with the competition which has already cut the rates, a bank's treasury head Ashish Parthasarthy said.

ICICI Bank revised its rates on November 28, while HDFC Bank did it on December 1. Both the banks put up the revised rates on their websites.

Smaller lender Yes Bank may also join the fray, its chief financial officer Rajat Monga said.
Deposit rate cuts are generally seen as a precursor to a cut in the lending rate as the base rate or minimum rate of lending formulas are based on the cost of deposits.

The other kind of prevalent frauds, as identified by RBI, include fictitious offers of large sum of money/lottery winnings by email or through phone calls by posing as RBI official and a fake RBI website for online transactions.

Fraudsters also lure members of public to secure their bank accounts against such frauds by asking them to share the bank account details, including user id/password, through an email or by clicking on a link given in email.

The RBI said that fictitious offers are also made in the name of other public institutions, such as, IMF, Income Tax authorities, Customs authorities or public figures like "Governor Raghuram Rajan or other senior RBI officials".

It warned that once the money is paid in fraudsters' accounts, there are remote chances of the members of public recovering the moneys.

Rather than responding to such offers, RBI said, the targetted persons should immediately lodge a complaint with Cyber Crime branch of the Police, or the local police.
RBI has also given on its website a list of the nodal agencies with whom the public can register complaints.

RBI also cautioned public against making any remittance towards participation in such schemes/offers from unknown entities since such remittances are illegal and any resident in India collecting and effecting/remitting such payments directly/indirectly outside India is liable to face action.

Such action can be initiated for contravention of the Foreign Exchange Management Act, as also for violation of regulations relating to Know Your Customer (KYC) norms/Anti Money Laundering (AML) standards, RBI said.

Stating that it does not undertake any type of money arrangement, by whatever name called, RBI also said that "it does not take any responsibility for recovering moneys remitted in response to such bogus communication."