The top three private sector lenders in the country — ICICI Bank, HDFC Bank, and Axis Bank — have slashed interest rates on retail term deposits across maturities. The move is aimed at boosting the net interest margins of the banks, which have been stressed due to slow loan growth and the high cost of deposits, said bankers and industry analysts.

ICICI Bank cut deposit rates by 50 basis points and the revised rates were effective yesterday, the bank stated on its website. The lender cut rates across maturities ranging from 91 days to less than five years. 

It now offers up to 8.75 per cent interest on retail term deposits, compared with 9.25 per cent earlier.

HDFC Bank also revised its deposit rates (effective today). The rates have been changed for maturities ranging from six months and 17 days to five years. The bank is offering up to 8.75 per cent interest on its retail term deposits.

Axis Bank reduced its deposit rates by at least 25 basis points. The move is effective yesterday.

Industry analysts had expected the lenders to reduce deposit rates to protect dilution in their interest margins.

Last week, State Bank of India had reduced deposit rates by 50-100 basis points. Analysts expect other banks to follow suit.

Net interest margins of banks have been stressed, as the increase in the cost of deposits outpaced the rise in yields on advances in the past one year. As loan demand has been largely muted so far this year, pressure on the margins is expected to intensify further. (Business Standard)