IDFC First Bank will reduce interest rates on fixed deposits in the next few days, with a cut in savings account rates to follow.
Speaking to analysts, managing director and CEO V Vaidyanathan said the revision of deposit rates is aimed at aligning those with larger banks. The bank is expected to cut FD rates by over 50 basis points (bps).
Despite the planned reduction in deposit rates, IDFC First remains confident about its growth prospects, with the private lender targeting loan growth of 20% and deposit growth of 22–23% in the current financial year.
“We are planning to reduce our rates very soon, maybe in a day or two. First of all, we are trying to reduce our fixed deposit interest rates,” said Vaidyanathan. “We are probably paying 70-80 bps more than the large, big four banks on the fixed deposit side. We want to go down to their rates.”
The bank currently offers interest rates ranging from 3% to 7.5% on FDs, with maturity periods spanning 14 days to 10 years.
IDFC First Bank will join the growing list of lenders who have reduced interest rates on fixed deposits and savings accounts. Private Banks have taken the lead in cutting savings account rates. HDFC Bank, ICICI Bank, Axis Bank and Federal Bank have reduced savings account rates by 25 bps earlier this month.
Similarly, most of the private and public sector banks, including State Bank of India, HDFC Bank, ICICI Bank, Axis Bank and Punjab National Bank, have reduced FD rates. The move is aimed at lowering the cost of funds and improving the net interest margin, which is likely to come under pressure due to the 50-bps reduction in the repo rate by the Reserve Bank of India over the past two months.
“In FY26, give or take, we would like to grow the loan book by 20% and deposits by 22%- 23%,” said Vaidyanathan.
The bank is expecting its net interest margin to shrink by 10 bps during the current financial year. The bank also managed to bring down its credit-deposit (CD) ratio, which was above 100% in March 2023, over the past couple of years. The CD ratio stood at 94% as of March end this year, compared with 107% as of March 2023.