ICICI, Dena bank cut deposit rates

August 10, 2007: A year ago, rate of interest were so low that people could easily be seen rushing to buy loans for everything from cars to homes. The credit was cheap and hence attracted more and more buyers. They were offered with good credit, easy repayment schemes, and flexible Equated monthly installments. Sounds Good. Isn?t it? However, the scenario is now a ?Once upon a time? story.

It would not be wrong to say that Cheap Home Loans have now died an early death. The central bank has snatched away the liquidity from the system with two consecutive cash reserve ratio (CRR) hikes.

The interest rates on home loans which used to be as low as 6.5 per cent has now shoot up to 11.25 per cent, thereby crippling the already suffering consumers.

The Reserve Bank of India has recently released a new credit policy, according to which, banks will now cut deposit rates across the board. The first followers are ICICI and Dena Bank which announced a cut in their deposit rates by 20-25 basis points.

ICICI Bank reduces the rates on deposits less than Rs 15 lakh for two schemes. For 181-365-day scheme, the interest rate has been reduced to 6.25% from 6.5% and for the 366-day to 2-year scheme, it has become 6.25% from 6.75%.

Following in footsteps is Dena Bank which has also cut its deposit rates across tenors, from 9.5% to 9%. The cut in rates is believed to be an immediate outcome of the recent CRR hike.