The bank also set interest rates for deposits of greater than one year at 8 per cent, according to a release.

Interest rate on 390-day deposit has been reduced to 8.5 per cent, while that on 590-day deposit will be 8.75 per cent against the earlier 9 per cent.

ICICI Bank said the 890-day special deposit scheme on which it was offering a 9 per cent interest would be discontinued.

The country''s largest bank, State Bank of India, had earlier announced a reduction in term deposit rates.

SBI has cut its peak interest rate offered on the 550-day deposit by 25 basis points to 8.75 per cent with effect from November 7.

Most banks are facing a margin squeeze with the rise in interest expenditure outpacing the increase in interest income at the start of the third quarter of the financial year. Public sector lenders Union Bank of India and Punjab National Bank had also cut their deposit rates across various maturities.