Mumbai: Another public sector bank has slashed its deposit rates. Bank of India (BoI) has announced that from November 12 onwards its deposit rates will be reduced by 50 basis points or 0.5 percent. With the increase in CRR by Reserve Bank of India by 50 basis points, banks were feeling the pressure, and with no possibility of increase in interest rates on retail loans visible in near future they had little options.

The new deposit rates for a term deposit of tenure one to two years will be 8.5 percent. A deposit of 5 years and above will earn interest at a rate of 9 percent. Deposits of amounts between Rs. 15 lakhs and Rs. 5 crores will not see any change in deposit rates for periods up to one year.

The past month saw many public and private sector banks slashing their interest rates. ICICI Bank, the largest private sector bank has reduced its interest rates on special deposit schemes by 25-50 basis points apart from realigning the interest rates in some segments. Union Bank of India reduced its deposit rates by 25-100 basis points, the Centurion Bank of Punjab, which cut rates by 25-50 basis points. These reductions affected deposits of various tenures. The largest public sector bank, State Bank of India (SBI), also slashed its deposit rates by 25 basis points after the CRR hike.

Reserve Bank of India (RBI) in its effort to weed out the shady practices in the Indian banking scenario, had earlier asked the banks to close all such fixed deposit schemes that have a lock-in feature for the simple reason that  such offers and promotions do not conform to its guidelines. Conforming to the apex banking regulators guidelines, BoI has withdrawn all its special schemes, which had a lock-in period and special interest rates.