New Delhi, Dec 6: The country's largest lender State Bank of India (SBI) today raised deposit rates by up to 150 basis points or 1.5 per cent across various maturities, a move that will provide better returns to people with fixed deposits in the bank.
The new rates will become effective from Tuesday.
The decision comes close on the heels of various private and public sector lenders including ICICI Bank, Punjab National Bank, Syndicate Bank and Bank of India raising their deposit rates, in response to RBI Governor D Subbarao's suggestion of giving better returns to depositors.
SBI, according to a official release, will offer a maximum interest rate of 8.75 per cent for deposits with maturity period of 8-10 years, marking an increase of 100 basis points.
The highest increase of 150 basis points will be in case of term deposits with maturity of 46-90 days. The depositors will earn an interest of 5.5 per cent as against existing 4 per cent.
The decision of SBI to raise fixed deposit rates will prompt other lender to hike their rates to compete for savers money. In an effort to tide over tight liquidity situation and increase its credit, ICICI Bank raised interest rates on fixed deposits of various tenors by 0.25-0.50 per cent.
These announcements come after RBI Governor D Subbarao recently asked banks to hike deposit rates and lower lending rates, to raise the level of national savings as well as to encourage investments needed for double-digit growth.
Term deposits of 91-180 days maturity will now fetch customers 6 per cent interest as compared to earlier 5.5 per cent, SBI said.
For fixed deposits with a tenor between 1-year to 554 days, the new interest rate will be 7.75 per cent against the existing 7 per cent, while 555-day fixed deposits of SBI will attract an interest rate of 8.5 per cent, an increase of 100 basis points.
The interest rate on term deposits of between 556 days to 2 years tenor will go up by 50 basis points to 7.75 per cent from tomorrow, while interest on the 2 years to 999 days maturity slab has been increased by 75 basis points to 8.25 per cent.
Even rate on 1,000 days fixed deposit scheme goes up up 75 basis points to 8.5 per cent compared to existing 7.75 per cent.
Interest rate on term deposit between 3-10 years maturity slabs goes up by 100 basis points or one per cent each.
Last week, SBI Chairman O P Bhatt had said, "If credit growth picks up, more deposits can be attracted into the banking system by better pricing which is beginning to happen...In the current situation, they (deposit rates) can only go up. "
On the lending rates, Bhatt had said the bank will take a call only in next month as it has already increased its newly introduced benchmark lending rate -- base rate, below which banks can't lend -- once this quarter. PTI
