FinMin asks banks to cut FD rates for senior citizens

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FinMin asks banks to cut FD rates for senior citizens
The finance ministry has asked banks to cut interest rates offered to senior citizens on fixed deposit accounts to control the cost of funds and that too at a time when deposit growth has been languishing, said a media report.

Currently, most of the banks offer 50 basis points more to senior citizens than what they offer to others while some offer 75 bps extra to such citizens.

Media reports said that some of the public sector banks, which were offering 75 bps extra, have already reduced it to 50 bps, and they are reluctant to reduce it further amid falling deposit growth.

FinMin, however, believes that low cost of funds will help banks to cut lending rates even as banks opined that deposits of senior citizens account for a very small proportion of total deposits due to which it may not provide adequate support to cut lending rates.

Read more about: banks, interest rates, fd
Story first published: Friday, February 1, 2013, 9:30 [IST]
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