Lok Sabha Question No. 945 (UNSTARRED), answered on 2016-04-29
Subject: Variation of Interest Rates
Ministry: FINANCE
Asked by: PREM SINGH CHANDUMAJRA

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

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## LOK SABHA

## UNSTARRED QUESTION NO. 945

## TO BE ANSWERED ON FRIDAY, APRIL 29, 2016/VAISAKHA 9, 1938 (SAKA)

## 'Variation of Interest Rates' QUESTION

## † 945.SHRI PREM SINGH CHANDUMAJRA:

Will the Minister of FINANCE be pleased to state:

- (a) whether the rates of interest on the deposits and loan amounts of banks vary in the nationalised banks in the country;
- (b) if so, the details thereof along with the formula fixed to determine these rates of interest; and
- (c) the steps taken by the Government to rectify the discrepancy of the interest of banks?

## ANSWER The Minister of State in the Ministry of Finance

## (SHRI JAYANT SINHA)

- (a) to (c) The interest rates on various types of deposits and loans provided by banks may vary from bank to bank,   but for a particular bank, they are uniform across the country.

Interest  rates  on  term  deposits  of  banks  were  deregulated  by  Reserve  Bank  of India (RBI) with effect from October 22, 1997 and on savings deposits with effect from October 25, 2011. In a deregulated environment, banks are free to determine their interest rates on deposits based on their commercial judgment.

With the introduction of Base Rate system since July 1, 2010, all rupee lending rates  (including  advances  up  to  Rs.2  lakh)  have  been  deregulated  and  these interest rates are determined by banks  themselves  as approved  by their respective Boards.

RBI  has  introduced  the  marginal  cost  of  funds  based  lending  rate  (MCLR)  with effect  from  April  1,  2016.   The  formula  for  working  out  overnight  MCLR  is  -  (a) Marginal  Cost  of  Funds  [=  92%  of  Marginal  Cost  of  Borrowings  (deposits  + borrowings)  +  8%  of  Return  on  Net  Worth]  +  (b)  Negative  Carry  on  CRR  +  (c) Operating Cost.

The  MCLR  system  is  expected  to  improve  transparency  in  the  methodology followed by banks for determining interest rates on advances.

Median Term Deposit Rates of Public Sector Banks (PSBs) as on 15th January, 2015 and 15th April, 2016 is given at Annexure-I.

Base Rates of PSBs as on 15th January, 2015 and 15th April, 2016 is given at Annexure-II.

Marginal  Cost  of  Funds  Based  Lending  Rate  (MCLR)  of  PSBs  as  on  1st  April, 2016 and 15th April, 2016 is given a t Annexure-III

## Median Term Deposit Rates - Public Sector Banks

| Sr. No.   | Bank                          |   Jan 15, 2015 |   April 15, 2016 |
|-----------|-------------------------------|----------------|------------------|
| 1         | Allahabad Bank                |           8.5  |             7    |
| 2         | Andhra Bank                   |           8.25 |             7    |
| 3         | Bank of Baroda                |           7.78 |             6.9  |
| 4         | Bank of India                 |           7.78 |             7    |
| 5         | Bank of Maharashtra           |           8.2  |             6.93 |
| 6         | Bhartiya Mahila Bank          |           8.04 |             6.88 |
| 7         | Canara Bank                   |           7.75 |             6.88 |
| 8         | Central Bank of India         |           8.35 |             7.43 |
| 9         | Corporation Bank              |           7.88 |             6.75 |
| 10        | Dena Bank                     |           8.25 |             7.05 |
| 11        | IDBI Bank Ltd.                |           8.38 |             7.5  |
| 12        | Indian Bank                   |           8.38 |             7    |
| 13        | Indian Overseas Bank          |           8    |             5.63 |
| 14        | Oriental Bank of Commerce     |           8.13 |             6.75 |
| 15        | Punjab &Sind Bank             |           8.25 |             7    |
| 16        | Punjab National Bank          |           7.38 |             6.75 |
| 17        | State Bank of Bikaner &Jaipur |           7.25 |             6.88 |
| 18        | State Bank of Hyderabad       |           8.25 |             7.13 |
| 19        | State Bank of India           |           7.25 |             6.75 |
| 20        | State Bank of Mysore          |           7.75 |             7.25 |
| 21        | State Bank of Patiala         |           8    |             7.01 |
| 22        | State Bank of Travancore      |           7.25 |             6.63 |
| 23        | Syndicate Bank                |           8.28 |             7.18 |
| 24        | UCO Bank                      |           8.5  |             7    |
| 25        | Union Bank of India           |           8    |             7    |
| 26        | United Bank of India          |           7.25 |             6.25 |
| 27        | Vijaya Bank                   |           8.25 |             6.75 |
| Minimum   | Minimum                       |           7.25 |             5.63 |
| Maximum   | Maximum                       |           8.5  |             7.5  |

Source: RBI

## Annexure-I

(Per cent)

Table 2: Base  Rates - Public Sector Banks

| Sr. No.   | Bank                             |   Jan 15, 2015 |   April 15, 2016 |
|-----------|----------------------------------|----------------|------------------|
| 1         | Allahabad Bank                   |          10.25 |             9.7  |
| 2         | Andhra Bank                      |          10.25 |             9.75 |
| 3         | Bank of Baroda                   |          10.25 |             9.65 |
| 4         | Bank of India                    |          10.2  |             9.7  |
| 5         | Bank of Maharashtra              |          10.25 |             9.7  |
| 6         | Bhartiya Mahila Bank             |          10.25 |             9.7  |
| 7         | Canara Bank                      |          10.2  |             9.65 |
| 8         | Central Bank of India            |          10.25 |             9.7  |
| 9         | Corporation Bank                 |          10.25 |             9.65 |
| 10        | Dena Bank                        |          10.25 |             9.7  |
| 11        | IDBI Bank Ltd.                   |          10.25 |             9.75 |
| 12        | Indian Bank                      |          10.25 |             9.65 |
| 13        | Indian Overseas Bank             |          10.25 |             9.9  |
| 14        | Oriental Bank of Commerce        |          10.25 |             9.7  |
| 15        | Punjab and Sind Bank             |          10.25 |             9.75 |
| 16        | Punjab National Bank             |          10.25 |             9.6  |
| 17        | State Bank of Bikaner and Jaipur |          10.25 |             9.7  |
| 18        | State Bank of Hyderabad          |          10.2  |             9.75 |
| 19        | State Bank of India              |          10    |             9.3  |
| 20        | State Bank of Mysore             |          10.25 |             9.65 |
| 21        | State Bank of Patiala            |          10.25 |             9.65 |
| 22        | State Bank of Travancore         |          10.25 |             9.95 |
| 23        | Syndicate Bank                   |          10.25 |             9.7  |
| 24        | UCO Bank                         |          10.2  |             9.7  |
| 25        | Union Bank of India              |          10.25 |             9.65 |
| 26        | United Bank of India             |          10.25 |             9.65 |
| 27        | Vijaya Bank                      |          10.25 |             9.65 |
| Minimum   | Minimum                          |          10    |             9.3  |
| Maximum   | Maximum                          |          10.25 |             9.95 |

Source: RBI

(Per cent)

Marginal Cost of Funds Based Lending Rate (MCLR)* - PSBs

| Sr. No.   | Bank                      |   April 1, 2016 |   April 15, 2016 |
|-----------|---------------------------|-----------------|------------------|
| 1         | Allahabad Bank            |            9.4  |             9.4  |
| 2         | Andhra Bank               |            9.45 |             9.45 |
| 3         | Bank of Baroda            |            9.1  |             9.05 |
| 4         | Bank of India             |            9.25 |             9.25 |
| 5         | Bank of Maharashtra       |            9.45 |             9.45 |
| 6         | Bhartiya Mahila Bank      |            9.55 |             9.55 |
| 7         | Canara Bank               |            9.35 |             9.35 |
| 8         | Central Bank of India     |            9.5  |             9.5  |
| 9         | Corporation Bank          |            9.53 |             9.53 |
| 10        | Dena Bank                 |            9.45 |             9.45 |
| 11        | IDBI Ltd                  |            9.4  |             9.4  |
| 12        | Indian Bank               |            9.4  |             9.4  |
| 13        | Indian Overseas Bank      |            9.65 |             9.65 |
| 14        | Oriental Bank Of Commerce |            9.45 |             9.45 |
| 15        | Punjab &Sind Bank         |            9.65 |             9.65 |
| 16        | Punjab National Bank      |            9.33 |             9.33 |
| 17        | State Bank of India       |            9.15 |             9.15 |
| 18        | State Bank of Hyderabad   |            9.5  |             9.5  |
| 19        | State Bank of B &J        |            9.5  |             9.5  |
| 20        | State Bank of Mysore      |            9.3  |             9.3  |
| 21        | State Bank of Patiala     |            9.6  |             9.6  |
| 22        | State Bank of Travancore  |            9.75 |             9.75 |
| 23        | Syndicate Bank            |            9.65 |             9.65 |
| 24        | UCO Bank                  |            9.48 |             9.48 |
| 25        | Union Bank of India       |            9.45 |             9.45 |
| 26        | United Bank of India      |            9.35 |             9.35 |
| 27        | Vijaya Bank               |            9.4  |             9.4  |
| Minimum   | Minimum                   |            9.1  |             9.05 |
| Maximum   | Maximum                   |            9.75 |             9.75 |

Source: RBI

Annexure-III

(Per cent)