Commercial banks have decided to offer a new interest rate of 11.03 per cent on deposits. Anil Sharma, executive director of the Bankers' Association, said that it has been decided to continue the interest rate on deposits.
Banks are required to disclose new interest rates on deposits every month. In the last few months, banks have been raising interest rates on deposits due to lack of investable funds. The bankers said that they would reduce the interest rate if it was comfortable in March. However, the banks have agreed to keep interest rates stable as liquidity problems have not ended.
A meeting of the chief executive officers of all 27 banks was held on Friday evening to decide whether to increase or decrease the interest rate. At the meeting, CEOs were divided over whether to raise or lower interest rates.
Most bankers were of the view that interest rates should be increased, not reduced. However, the association decided to keep the interest rate stable on Sunday, saying that raising interest rates alone would not bring in deposits.
Raising interest rates on deposits also affects interest rates on loans. Banks are required to make the base rate public every three months. As interest rates on deposits rise, so does the base rate, which has a direct effect on interest rates on loans.
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