Axis Bank, Punjab National Bank, others cut fixed deposit rates as demonetisation cash pours in

With cash gushing in attributable to the ending of Rs 500 and Rs 1,000 currency notes, banks still cut deposit rates. With cash gushing in attributable to the ending of Rs five hundred and Rs one,000 currency notes, banks still cut deposit rates. On Monday, the country’s third-largest personal sector investor, Axis Bank, reduced rates on fastened deposits of tenures between one and 3 years by twenty-five to 50 basis points (bps).

At 7%, the rate of interest offered by the bank on annual deposits is currently on par thereupon offered by larger rivals – ICICI Bank and HDFC Bank.

The investor reduced rates on two- and three-year deposits by fifty bits per second to 6.75%.State-owned lenders Bank of Baroda, the geographic area full-service bank (PNB), IDBI Bank and Syndicate Bank have conjointly cut rates on one-, two- and three-year deposits by between ten and forty bits per second.

One-year deposits with Bank of Baroda, PNB and Dena Bank can currently earn interest at the speed of seven, whereas those with IDBI Bank can earn seven.15%. Syndicate Bank can supply seven.3% on annual deposits. The country’s largest bank, the bank of the Republic of India,reduced its annual rate of interest to 6.9%, effective November seventeen.

The government’s recent move to devaluate notes of Rs five hundred and Rs 1,000 denominations has resulted in deposits with banks rising. On Monday, the bank of India aforementioned banks rumored having received deposits value Rs 5,11,565 large integer between November ten, the primary operating day once ending was declared, and November eighteen.

Deposits rose 9.82% year-on-year within the time period terminated Oct 28, with the outstanding deposits within the industry standing at Rs ninety-nine.84 lakh large integer.

In a note dated November nineteen, Deutsche Bank wrote state-owned banks area unit poised to realize the foremost from the accelerated accretion of deposits within the system. “The impact on PBT (profit before tax) ought to be 5/15% (for FY18E) for private/PSBs (public sector banks), as most deposits can return to PSBs owing to their distribution network. we have a tendency to raise our target costs by 7-35% for PSU banks,” the note aforementioned.

The investment bank sees concerning 80th of high-denomination bank notes getting into the system within the style of deposits, of that concerning four-hundredth is anticipated to stay within the system over time. “This is probably going to extend the deposit growth by 9-10% over consequent 2 months and by 5-hitter over time,” Deutsche Bank wrote.