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Representational Image
Representational Image

After Prime Minister Narendra Modi announced his demonetisation move, banks across country flooded with people to deposit their old currency notes. The banks have said that demonetisation resulted in massive bonanza, which is pulling down the interest rates.

SBI along with some private banks include Axis Bank took the lead by cutting lending rates by 15-20 basis points. This may not be a pleasant one for those who are depositing their money in banks.

State Bank of India (SBI) reduced rates on deposits from one year to 455 days to 6.90%, down 15 bases point. SBI chairman Arundhati Bhattacharya today said that lending rates were expected to come down.

The bank will now charge 9.05% on one-year loan, which is higher than 8.90% by SBI, the country’s largest bank.

SBI has cut interest rates from 7.10% to 6.95% on deposits from 456 days to below 2 years. Now, bank offers 6.85% interest rate against 7% earlier on 2year to 3 year deposits.

Kotak Mahindra Bankhas also cut interest rates on 1-year deposits by 25bps to 7%.

Axis Bank, known to be third-largest private lender, had also reduced its marginal cost of lending (MCLR) by 15 basis points on all tenors up to 1 year and by 20 bases points for upto 2 and 3 years tenors.