Axis Bank, one of India’s top two private banks, has cut its lending rates by 0.15 percentage points in the wake of the ongoing currency exchange program.
With this, the bank’s ‘marginal cost-based lending rate’ has been reduced to 9.05% for one year and 9.15% for three years.
The change will come into effect from Nov 18.
This would reduce the monthly payments for Axis Bank home loan and other floating loan customers.
The cut has come in the middle of expectations that all banks in the country would be forced to reduce their interest rates due to the ongoing ‘war on black money’.
Banks have received net deposits of around 3.5 lakh cr in around one week after the government asked its citizens to surrender their 500 and 1000 rupee notes.
Though anyone can deposit any amount under the currency swap scheme, they can withdraw only Rs 24,000 per week.
As a result, around 4 lakh cr has been deposited and only about one-seventh of that has been withdrawn.
In addition, the potential extinguishment of notes worth lakhs of crores of rupees is also expected to bring down the prices in the economy, potentially leading to deflation. This too would require banks to cut rates to spur demand.