Bajaj Finance Defies Trend, Cuts Top Deposit Rates by 20 Bps Amid Banking Deposit Struggles

Kolkata: While many banks are struggling to attract public deposits, Bajaj Finance, a major non-bank financial company, is doing the opposite by cutting its deposit rates by 20 basis points (bps) for its highest rate category.

For context, one basis point equals 0.01%.

Annual Rate for Deposits

Starting from July 16, Bajaj Finance will offer an annual rate of 8.40% for deposits with a maturity of 42 months, down from the current 8.60%. Senior citizens will see their rates decrease from 8.85% to 8.65%. Other maturity categories will remain unchanged.

This decision follows Bajaj Finance’s impressive 26% growth in deposits, reaching ₹62,750 crore at the end of June, up from ₹49,944 crore a year earlier.

Competition

Despite intense competition from banks and capital markets, Bajaj Finance continues to offer higher rates than many traditional banks. Even after this reduction, their 42-month deposit rate remains the highest they offer for both regular and senior customers.

Net Interest Margin (NIM)

The rate cut might be due to a decrease in the company’s net interest margin (NIM). By the end of March, Bajaj Finance had noted that their NIM was shrinking because of rising funding costs and a shift towards more secured assets. They expect NIM to decline by another 30-40 bps between June and September, with funding costs peaking around July and August.

Industry leaders anticipate that financial companies will continue to face pressure on their NIMs over the next few quarters, as the impact of rising deposit rates will take time to fully materialise.