The nation's largest lender, State Bank of India has cut bulk deposit rates by upto 1.9 per cent on various maturities. The move to cut deposit rates comes close on the heels of the demonetization, which has left the banks flush with funds.
There are hopes that this may also lead to a sharp drop in lending rates, which would augur well for the economy. Banks in the country have received a staggering sum in excess of Rs 5.4 lakh crores, after the government decided that Rs 500 and Rs 1,000 notes would no longer be a legal tender in India.
It is highly likely that other banks may also slash interest rates, in the coming days. If that happens it could lead to a drop in interest rates across the economy.