May trim deposit rates soon: Bank of Maharashtra ED
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Bank of Maharashtra may trim deposit rates

Bank of Maharashtra says it may soon reduce deposit rates on some special schemes that were launched last fiscal to attract depositors in the midst of the liquidity crunch.

 PTI   
  • Mumbai,  April 16, 2011  
  • |  
  • UPDATED   11:59 IST

Bank of Maharashtra on Friday said it may soon reduce deposit rates on some special schemes that were launched last fiscal to attract depositors in the midst of the liquidity crunch, further reinforcing the industry trend of a lower deposit rate regime in the system.

"We may bring down deposit rates on some of our schemes after our ALCo (asset liability committee) meeting this weekend. However, we would not like to raise lending rates from current levels," the state-run bank's Executive Director MG Sanghvi said.

Sanghvi, however, said the bank will track inflation and the Reserve Bank's interest rates moves to take a final call on raising lending rates.

Currently, the bank offers up to 9 per cent on deposits of various tenures, while many banks offer close to 10 per cent on term deposits. The bank's benchmark prime lending rate is 13.75 per cent, while its base rate is 9.50 per cent now.

In the wake of the severe liquidity crisis that began in the third quarter of 2010 following the successive liquidity tightening measures by the central bank to control inflation, banks had jacked up deposit rates by almost 3 per cent to shore up their funds.

The Reserve Bank has hiked the policy rates eight times since March, 2010 to tame runaway inflation. The current policy rates -- short-term borrowing and lending rates -- stand at 6.75 and 5.75 per cent, respectively.

On the inflation front, the last fiscal closed on a disappointing note with the headline inflation for March touching 8.98 per cent, well above the RBI projection of 8 per cent.

In fact, this 8 per cent projection was the result of three successive upward revisions-- from 5 per cent in last annual policy review to 8 per cent in last review in January, 2011.