Deposit rates likely to stay unchanged

GIVEN THAT DEPOSIT mobilisation continues to be a challenge, banks may not bring down deposit rates immediately despite the Reserve Bank of India’s 25-basis-point repo rate cut on Friday.

- KSHIPRA PETKAR

“Banks are already facing challenges on CASA and deposits. If we reduce the deposit rate further, itis going to hurt us. We may consider cutting it later, depending on competition, but only in January — nothing in December. Fornow,1 think deposit rates will remain as is,’ an official at a public sectorbank said.

Another banker at a public sector bank noted that while deposit repricing will take place, it will have alag effect.“We have already absorbed 100 basis points of the rate cut; this 25basis-point cut would take anothertwo quarters to absorb,” he added.