HDFC Bank cut interest rates on retail term deposits between 25- 50 basis points. It has cut rates on 48-day to 1 year deposits.
The rates have been cut up to the one year bucket - almost all the buckets upto one year except for a few at the extreme short end.
In an interview to CNBC-TV18 Ashish Parthasarthy, Head Treasurer of HDFC Bank said he was not sure if the deposit rate cut taken by the bank would transfer into a base rate cut immediately.
According to him the trigger for the rate cut could have been due to two reasons. One, even though deposits had seen a growth there was no credit growth seen. Also the corporate deposits (CDs) and commercial papers (CPs) had come off significantly. Two, the bank needed to align themselves to the rate cuts taken by other banks.
However, credit growth is likely to pick up by the end of this quarter, he said.
HDFC Bank cut interest rates on retail term deposits between 25- 50 basis points. It has cut rates on 48-day to 1 year deposits.
Below is the transcript of Ashish Parthasarthy's interview to CNBC-TV18's Latha Venkatesh and Sonia Shenoy
Latha: What was the trigger for this cut and how much does it reduce your cost, what are the buckets in which you have cut deposit rates?
A: The trigger is very clear, we have seen banking deposits grow at a healthy pace, credit growth has not kept pace and the money market rate especially on short-term papers like corporate deposits (CDs) and commercial papers (CPs) have come off significantly. So one this is reaction to what is happening in the market.
The second is a reaction to where our rates were vis-à-vis all the competitors; we have seen several rounds of rate cuts by other banks earlier so we are just getting that into alignment. So that is the logic behind cutting some of the rates. The rates have been cut up to the one year bucket - almost all the buckets upto one year except for a few at the extreme short end.
More to come
HDFC Bank stock price
On December 04, 2014, at 09:25 hrs HDFC Bank was quoting at Rs 935.50, up Rs 3.05, or 0.33 percent. The 52-week high of the share was Rs 965.45 and the 52-week low was Rs 618.00.
The company's trailing 12-month (TTM) EPS was at Rs 38.35 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 24.39. The latest book value of the company is Rs 179.96 per share. At current value, the price-to-book value of the company is 5.20.
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