New Delhi, Jun 4 (PTI) State-owned United Bank of India today slashed interest rates on fixed deposits by up to 0.5 per cent on select maturities, a move that is being seen as precursor to a cut in lending rate.
The bank has revised its interest rates on its retail term deposits for 1 year to 8 per cent and above 1 year to 7.75 per cent, UBI said in a statement.
Currently, the interest rate on fixed deposits above 1 year is pegged at 8.25 per cent. The new rates will be effective from June 8, it said.
PNB and Axis Bank had yesterday reduced fixed deposit rates. The decision by banks to cut interest rates on fixed deposits comes two days after the Reserve Bank reduced key policy rate.
As part of its second bi-monthly monetary policy review, RBI cut the repo rate (short-term lending rate) from 7.5 per cent to 7.25, but left other policy tools like cash reserve ratio unchanged at 4 per cent and Statutory Liquidity Ratio (SLR) at 21.5 per cent.
Following policy action, several banks including market leader State Bank of India have reduced base rates or minimum lending rate. SBI cut it to 9.70 per cent from 9.85 per cent effective June 8.
Allahabad Bank cut base rate by 0.30 per cent to 9.95 per cent, while Dena Bank, Punjab & Sind Bank reduced their base rate by 0.25 per cent each.
Dena Bank and Punjab & Sind Bank lowered their base rate to 10 per cent. With these reductions, all loans linked to the base rate will come down proportionately.
IDBI Bank, however, has reduced bulk deposit rate, a move which is a precursor to a cut in lending rate. Other banks are likely to follow suit in the next few days.