Chidambaram For Lower Deposit Rates

It is none other than the Finance Minister who is now advising banks to lower deposit rates. He even indicated how much a one-year term deposit should fetch.The finance minister feels that with inflation coming down and banks sitting on surplus liquidity banks should be able to nudge their rates down. 8.5 % for deposits should be the ideal level, said Union Finance Minister P Chidambaram.

According to bankers Finance Minister wants the benefit of lower deposit rates to be passed on to borrowers. If high liquidity situation continues to prevail bankers are expecting deposit rates to come down by another half to one per cent.The Finance Minister has said benefit should be passed on to. I expect deposit rates to fall further in the next one month, said SK Goel, CMD, UCO Bank.

After the CRR hike banks are in no mood to cut lending rates. In fact to maintain their margins banks are bringing down deposit rates and holding on to their lending rates.

Once banks are comfortable with the margins only then would they be open to review loan rates. Home loan rates are rock bottom right now, most of my lending is sub-prime lending rate, no question of cutting lending rates, said PP Mallya, CMD, Vijaya Bank.

So while depositors brace themselves for deposit rate cuts they as borrowers are the losers. And while the finance minister has meant well in suggesting banks to refrain from high deposit rates so that there is a chance for lending rates to soften bankers are not listening.