Major lenders have started raising interest rates on select fixed deposit (FD) tenures following the Reserve Bank of India’s (RBI’s) 25-basis-point repo rate hike in October. The revisions come amid expectations of further monetary tightening, with retail inflation breaching the central bank’s upper tolerance limit of 6 per cent.
On Thursday, state-owned Bank of Baroda (BoB) raised interest rates on its special 555-day retail term deposit scheme by 10 basis points (bps), taking the maximum rate offered to 7.5 per cent, effective November 12.
The revised rates under the bob Golden Goal Deposit Scheme apply to retail term deposits below ₹3 crore across customer categories. Rates on deposits across other tenures remain unchanged. General customers will earn 6.85 per cent on callable deposits and 6.90 per cent on non-callable deposits. Resident senior citizens are eligible for rates of up to 7.40 per cent, while super senior citizens (aged 80 years and above) can earn up to 7.50 per cent.
Federal Bank has also increased the additional interest benefit offered to senior citizens on term deposits to 0.60 per cent from 0.50 per cent, taking the maximum rate on select tenures to 7.50 per cent. The revised rates, effective November 12, apply to deposits with tenures of 18 months and two years to less than three years.
Senior citizens will earn 7.40 per cent on deposits with a premature withdrawal facility and 7.50 per cent on deposits of ₹1 crore and above without the facility. The bank said the effective annualised yield on these deposits could go up to 8.18 per cent and 8.30 per cent, respectively, for a 35-month tenure. General customers, including non-resident Indians (NRIs), will earn 6.80 per cent and 6.90 per cent, respectively, on the two options. The revised rates apply to single term deposits below ₹3 crore.
Several other banks have also revised FD rates in recent weeks, largely on select tenures and special deposit schemes. Among private sector lenders, HDFC Bank has raised rates by up to 50 bps on select tenures, while ICICI Bank has increased rates by 10 bps on select longer-term deposits. Kotak Mahindra Bank has revised rates on select maturities, taking its maximum rate for general customers to 6.80 per cent.
Among public sector banks, Canara Bank has increased rates by up to 15 bps on select tenures, including its 555-day deposit, while Indian Overseas Bank has raised the rate on its 444-day deposit by 15 bps to 6.75 per cent. Indian Bank has also increased rates on its 555-day and 777-day special deposit schemes by 15 bps each, taking them to 6.80 per cent and 6.75 per cent, respectively.
Small finance banks are also offering higher rates to attract deposits. Utkarsh Small Finance Bank is offering up to 8.50 per cent to senior citizens, while Suryoday Small Finance Bank is offering up to 8.60 per cent to the segment.
Meanwhile, lending rates have also started moving up. State Bank of India (SBI), HDFC Bank, Punjab National Bank, Bank of India, Indian Bank, Canara Bank and Bank of Baroda have raised their marginal cost of funds-based lending rates (MCLR) by 5-20 bps across select tenures in October and November.
