Banks slash deposit rates taking cue from RBI's 25 bps repo cut

Tight liquidity and strong credit growth in Q4 FY25 discouraged banks from passing the rate cut to depositors

- Gopika Gopakumar & Anshika Kayastha

Banks have started lowering deposit rates after sitting on the fence for months, waiting for the liquidity to be in surplus and credit growth to ebb.

With both conditions now met, banks have taken the cue from the Reserve Bank of India's (RBI) repo rate cut of 25 basis points (bps) last week.

While the liquidity surplus stood at ₹2.08 trillion on 10 April, non-food credit growth slowed to 10.9% year-on-year (y-o-y) as of March end, almost half of what it was a year earlier.

State Bank of India, Bank of India and Kotak Mahindra Bank have slashed interest rates on fixed deposits following the repo rate cut.

India's largest lender SBI cut term deposit rates by 10 basis points (bps), while Bank of India has reduced rates by up to 25 bps.