Citibank likely to slash interest rates

After majority of Indian banks slashed their interest rates taking a cue from Reserve Bank's recent policy signals, leading foreign lender, Citibank is likely to follow the suit by cutting its lending and deposit rates in near future.

Citi is considering up to 0.5 per cent cut in its deposit rates and a similar reduction in its benchmark prime lending rates, a top Citibank Official said.

"We may look at an up to 0.5 per cent reduction in our deposit rates across different tenures. With the cost of funds in the banking system coming down, there is a clear downward pressure on interest rates," the official said.

Citi had slashed its PLR by 0.75 per cent in November last year. Its PLR at present stands at 15 per cent.

"Once the deposit rates are lowered, there is an increased scope for effecting a reduction in our lending rates," the official said.

Many banks including the largest Indian lender, State Bank of India (SBI) and ICICI Bank had cut their lending and deposit rates in the recent past to translate the recent cuts in RBI key rates.

In order to improve liquidity in market and to prompt banks to lower their rates, the RBI has cut its cash reserve ratio to 5.5 per cent, repo rate to 6.5 per cent and reverse repo to 5 per cent since October last year.