Keeping deposit rates high to attract deposits will have implications for the cost of funds and will limit the ability of banks to reduce lending rates below certain level, the bankers told the Minister.
Indian Overseas Bank (IOB) CMD S A Bhat said, "We only brought out the constraints due to which we are not in a position to cut down our deposit rates below a certain point."
Many post office savings bank schemes like National Savings Certificates, Monthly Income Scheme and Public Provident Fund (PPF) offer 8 per cent returns.
Recently, state-run Punjab National Bank reduced the peak deposit rate to 8 per cent for maturity in between one to less than 5 years. |
