State Bank of India, the nation's largest commercial bank, and ICICI Bank, the second-largest, both said on Monday that they might cut the interest rates they offer to depositors.
"We are examining it," State Bank of India chairman A K Purwar told reporters at a function celebrating the annual day of the National Institute of Bank Management, when asked if the bank was considering cutting its deposit rates.
ICICI Bank managing director H N Sinor said that his bank was also reviewing the situation, in response to a similar query.
"Government bond yields have fallen, but fixed deposit rates have not, so we need to realign," Purwar said.
State-run SBI now pays between 4.25 per cent and 6.5 per cent on deposits with maturities starting from 15 days to more than three years.
Private-sector ICICI Bank has a similar interest rate structure for deposits.
SBI has already lowered its deposit rates twice since the central bank cut key interest rates in its monetary policy review unveiled in end-October.
Indian interest rates have fallen sharply since the central bank cut rates, and the slide has been hastened by abundant liquidity.
The benchmark 10-year government bond yield has fallen by one percentage point since October to a new life low.
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