After hiking lending rates for the last couple of days, banks have now turned their attention to hiking rates on their fixed deposit schemes.
MUMBAI: After hiking lending rates for the last couple of days, banks have now turned their attention to hiking rates on their fixed deposit schemes.
State Bank of India, the country’s largest bank, hiked its fixed deposit rates by 0.50% to 0.75% on Friday. Following this hike, new fixed deposits maturing between 181 days to less than one year will earn 8% interest compared to the existing 7.50%.
Also, FDs maturing in one year to less than 3 years will earn 9.50% interest compared to 8.75% previously, while senior citizens will earn 10% interest. The new rates are effective Monday.
North India-based public sector giant Punjab National Bank has also hiked deposit rates by up to 0.50% for various maturities. The new rates would be effective from July 1.
With two of the largest public sector banks hiking deposit rates, other banks will also have to hike rates to stay competitive.
Union Bank of India increased its interest rates on deposits by 0.25% to 1% on Thursday.
Among the private sector banks, HDFC Bank has also raised deposit rates effective June 20. For deposits maturing in one year 17 days to 2-years, customers get 8.25% interest at HDFC Bank.
ICICI Bank is the only major bank which has neither changed its deposit or lending rates. However, ICICI Bank officials indicated that the change may happen soon.
“Generally both deposit rates as well as lending rates are going up. But we are watching the situation on day-to-day basis,” said Chanda Kochhar, joint managing director and chief financial officer at ICICI Bank.
Another ICICI Bank official said the bank may decide on hiking rates as early as Monday. ICICI currently offers 8% interest on deposits maturing in one year to 389 days and 8.50% on deposits maturing in 390 days.
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