Banks to cut deposit rates starting from April: Report

Starting April, banks are likely to cut deposit rates in order to protect their margins, a report by Mint said on March 26.

This comes at a time when experts are expecting easing credit demand and another rate cut by the central bank, the newspaper said.

Despite the Reserve Bank cutting the repo rate by 25 bps in February, most lenders decided not to reduce the deposit rates till now, Mint said. The report further said that bankers were worried that high rates could force out deposits.

A rate cut in April, which is widely expected as inflation stood at 3.6 percent in February, will lead to deposit rate cuts as that’s the only way to pass on the benefits to borrowers, according to the paper.

Low deposit rates and another repo rate cut will lead to improvement in net interest margin for banks, the report said.

RBI will hold its monetary policy committee meeting from April 7 to 9.

Meanwhile, in bad news for bank account holders, the central bank has announced an increase in ATM interchange fees by Rs 2 for financial transactions and Re 1 for non-financial transactions.

The new changes will be effective from May 1, 2025.

The cash withdrawal fee will go up to Rs 19 from Rs 17 per transaction, and the balance check fee will go up to Rs 7 from Rs 6 per transaction, according to a report by Financial Express.An ATM interchange fee is a charge that one bank pays to another for offering ATM services to customers.