Deposit Rates - NewNerve

Public Sector Banks (PSBs) in India have seen their spreads between lending and deposit rates shrink to a 10-year low of 2.28%, according to data from the Economic Times BFSI. This is significantly lower than the 3.81% spread maintained by Private Banks (PVBs). This narrowing of spreads reflects several factors, including: Increased competition: The banking sector in India is becoming increasingly competitive, with both PSBs and PVBs vying for market share. This has put pressure on banks to offer lower lending rates and higher deposit rates, leading to a compression of spreads. RBI's policy stance: The Reserve Bank of India (RBI) has been maintaining an accommodative monetary policy stance in recent months, which has helped to keep interest rates low. This has also contributed t...

In a recent report by the State Bank of India (SBI), it has been highlighted that public sector banks (PSBs) in India have experienced a more substantial increase in deposit rates compared to private banks. Additionally, there has been a significant jump in deposits made by senior citizens. This development signifies the growing confidence of both banks and depositors in the Indian banking system. Let's delve deeper into the findings of the report. Deposit Rate Hike for PSBs: The report reveals that PSBs have been successful in raising deposit rates, despite the Reserve Bank of India (RBI) holding the rate since February 2023. The aggressive approach by select banks to attract deposits, coupled with fluctuating liquidity constraints, prompted the banking system to raise the deposit rates...

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PSBs’ Spreads Hit 10-Year Low: Implications for Lending, Deposits, and Profitability

Report Reveals Higher Deposit Rates for PSBs, Senior Citizens Embrace Banking