Oriental bank of commerce has slashed deposit interest rates on term deposits with 1-2 year maturity to 9.25 percent, from the existing 9.5 percent. The new rates will apply from July 5.

On what triggered the bank to reduce its deposit rates, for term deposits with 1-2 years maturity, by 25 basis points, Mr. S. L. Bansal, Chairman and Managing Director of OBC said that about 70 percent of the bank's total deposits consist of term deposits with a maturity period of 1-2 years. He further added that the call to reduce the deposit rate was made in a meeting of asset liability committee (ALCO) held yesterday.

It is to be noted that the bank's deposits are increasing at a rate of 24 percent per annum whereas its advances are increasing at a rate of just 16-17 percent per annum. Often, for lack of projects for financing, the bank has to invest its surplus funds in G- Secs.

It is speculated that the reduction in deposit rates could be followed by a reduction in OBC's lending rate too. At present, the bank's base rate 10.5 percent. Base rate is the rate below which banks cannot provide loans.