From lowering interest rates to controlling costs, some small and medium-sized banks are reducing deposit interest rates

Xinhua News Agency, Beijing, March 5 — The China Securities Journal published an article on March 5 titled “From Competing on Interest Rates to Cost Control: Some Small and Medium Banks Lower Deposit Rates.” The article states that since March this year, several small and medium banks, including Heilongjiang Youyi Rural Commercial Bank, Nanjing Pukou Jingfa Village Bank, and Shanghai Huarui Bank, have reduced deposit interest rates. After these adjustments, some small and medium banks’ deposit rates have entered the “1” range, with all fixed-term deposit rates for various periods below 2%. Industry insiders say that the intensive reduction of deposit rates by small and medium banks may seem like a numerical change, but it reflects a profound transformation in China’s banking development philosophy.

From “Competing on Interest Rates and Scale” to “Cost Control and Efficiency Improvement,” small and medium banks are transforming towards reducing costs, increasing efficiency, and building specialized service systems. Experts suggest that small and medium banks should leverage their local roots, deeply understand regional industrial structures, business conditions, and residents’ financial needs to provide more precise financial services.

Several small and medium banks have lowered deposit rates

In March, many small and medium banks began adjusting deposit rates, including products like demand deposits and fixed-term deposits. For example, Nanjing Pukou Jingfa Village Bank announced that starting March 2, the interest rates for three-year and five-year deposits for both corporate and individual customers were reduced from 2.2% to 1.88%.

Shanghai Songjiang Fuming Village Bank recently announced that from March 1, the one-year fixed deposit rate was adjusted to 1.85%; from March 10, the seven-day notice deposit rate was adjusted to 1.30%. This bank had previously lowered deposit rates at the end of December 2025. Comparing the changes, this March’s adjustments saw the one-year fixed deposit rate decrease from 1.90% to 1.85% (a 5 basis point drop), and the seven-day notice deposit rate decrease from 1.55% to 1.30% (a 25 basis point drop).

Additionally, Heilongjiang Youyi Rural Commercial Bank, Yunnan Shiping Beiyin Village Bank, Shanghai Huarui Bank, and other rural commercial banks, village banks, and private banks also lowered deposit rates in March. After the adjustments, some banks’ fixed deposit rates for various terms are below 2%.

For example, Heilongjiang Youyi Rural Commercial Bank adjusted rates for demand deposits, three-year, and five-year fixed deposits starting March 1. After the adjustment, the bank’s one-year, two-year, three-year, and five-year fixed deposit rates are 1.40%, 1.50%, 1.75%, and 1.60%, respectively.

Rebuilding the banking competition logic

Industry insiders say that the competition logic in banking is undergoing a fundamental shift. Zeng Gang, director of the Shanghai Financial and Development Laboratory, believes that with the rapid development of financial technology and the deepening of digital transformation, the long-standing advantages of “familiarity and local ties” for small and medium banks are being rapidly weakened.

“The original mission of small and medium banks is to serve the local economy, small and micro enterprises, and urban and rural residents. They must abandon blind expansion and cross-sector operations, focus on local markets, and deepen niche areas,” Zeng Gang states. He believes that the core of differentiated development for small and medium banks lies in competitive differentiation, which depends on identifying their comparative advantages and building a unique service system.

Zeng Gang emphasizes that small and medium banks should strengthen the “customer-centric” management philosophy, establish more flexible and efficient decision-making mechanisms and service processes. In product design, they should combine local industry characteristics to develop region-specific financial products; in business models, they should explore integrated “online + offline” service modes, enhancing digital infrastructure and online service capabilities while leveraging their branch networks’ proximity to customers to provide warm, offline services.

Source: Xinhua News Agency