Kolkata: At a time when several banks are facing stiff challenges in garnering public deposits, leading non-bank company Bajaj Finance has decided to lower deposit rates by 20 basis points on its highest rate slab, bucking the industry trend.
One basis point is a hundredth of a percentage point.
The finance company will offer 8.40% a year from July 16 against 8.60% now for 42 months’ maturity, people familiar with the matter said. Senior citizens will get 8.65% against 8.85% currently. There will be no change in other maturity slabs.
The rate-cut decision came after the company recorded a 26% year-on-year growth in deposits at Rs 62,750 crore as of June-end, compared with Rs 49,944 crore a year ago.
Competition for deposit garnering has been intense with the capital markets drawing significant funds from savers, while mainstream lenders have offered higher deposits to draw in customers. State Bank of India raised deposit rates in May by 25-75 basis points to woo customers.
To be sure, non-banking finance companies offer higher rates than their banking peers.
Even after the rate reduction, the 42-months deposit rate will be the highest offer by Bajaj Finance for both regular and senior customers.
Bajaj Finance did not respond to ET queries on the matter till press time. However, in a regulatory filing to stock exchanges last week, it said that its liquidity position remained strong with a net surplus of about Rs 16,200 crore at the end of the first quarter of the fiscal.
This decision may have been triggered by the fall in net interest margin (NIM). At the end of March, the company said that its net interest margin had been moderating throughout FY24 due to increase in cost of funds and gradual
shift in assets under management composition towards secured assets.
The company expected net interest margin to moderate by 30-40 bps over the June and September quarters from the March quarter’s 10% and its cost of funds to peak by July and August.
Captains of the industry expect the pressure on NIM for the financial sector companies to continue for the next few quarters as the impact of deposit rates rise comes at a lag because repricing of deposits at higher rates is an ongoing process.
