The private sector bank, Federal Bank, has announced that it may slash its fixed deposits interest rates, particularly for Non-Resident (External) Accounts, in the coming days.
It is reported that non-resident deposits form a major chunk of the bank's total deposits; about one-third of the bank's total deposits consists of NRE remittances. In the last quarter ending September, 2012, the bank recorded a 62.3 percent rise in its non-resident deposit mobilization. Currently, about 22 percent of the bank's total deposits consist of deposits made in NRE accounts.
To attract non-resident Indian customers, the bank has been providing high interest rates on NRE fixed deposits. NRE accounts are those accounts which can be opened in the name of NRI individuals only.
On the matter, the Managing Director and Chief Executive Officer of Federal Bank, Mr. Shyam Srinivasan said that the interest rates on deposits are going down in general, and it is expected to go down further. He added that during the second quarter, savings accounts and demand deposits increased by 14.98 percent, at Rs. 14,355 crore, whereas fixed deposits increased only by 1.1 percent, to Rs. 35,162 crore.
It is to be noted that despite reducing its interest rates on term deposits by 50 basis points in the quarter ending September, the Kochi based bank is still offering the highest interest rate in the said segment.