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Banking | SBI, PNB cut deposit rates by 0.25-0.50%

Banking | SBI, PNB cut deposit rates by 0.25-0.50%
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First Published: Fri, Nov 06 2009. 10 48 PM IST
Updated: Fri, Nov 06 2009. 10 48 PM IST
Mumbai: The country’s two largest banks, State Bank of India (SBI) and Punjab National Bank (PNB), on Friday cut deposit rates by 0.25% to 0.50%, effective 9 November even as SBI extended its cheap home loan rate scheme till March.
Following the rate cut, deposits for 181 days to less than one year will offer 5.25%, down from 5.75%. Deposits between one year and less than two years will offer 6% interest against 6.25% earlier and deposits for three years to less than five years will offer 6.50% against the current rare of 7%.
The bank has also extended its low-interest rate home loan facility till March.
The three schemes under which SBI gives home loans starting at 8% was scheduled to end in November.
In case of PNB, the maximum rate on retail term deposits will be 7% in the bracket of deposits of three years and more.
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Credit growth falls to single digits at 9.6%
Mumbai: The credit growth in the Indian banking system has fallen to single digit, at 9.7% for the week ended 23 October, as against 29.1% a year ago, according to data from the Reserve Bank of India (RBI).
The last time credit growth rate fell to these levels was in March 1997, at 9.6%.
The credit growth in the industry has been falling since the start of the credit crisis in September 2008 as companies stayed away from availing fresh loans from banks for their new projects.
The sluggish credit growth has forced RBI to revise its credit growth target in its second quarter review to 18% from 20% for the fiscal year ending March.
RBI also advised banks to step up their lending exercise but banks complain that companies are not availing loans already sanctioned to them. The low credit growth was one of the crucial factors why RBI did not raise interest rate in the system, as even with this prevailing low rates, companies have not been availing money from banks. However, bankers are saying that companies have started availing loans and in the coming days, the credit growth figure would increase.
— Anup Roy
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First Published: Fri, Nov 06 2009. 10 48 PM IST