Back to Career News

Banks hike deposit rates to woo savers

June 24, 2022

Banks hike deposit rates to woo savers
Banks are increasing deposit rates to attract savers, as they seek to raise funds to meet growing credit demand despite higher lending rates, and with the new spike in Covid-19 infections has little impact on economic activities. 

State Bank of India, the country’s largest lender, last week increased the retail rate by 20 basis points, or 0.2 percentage points, for fixed deposits of less than two years. 

Private lenders HDFC Bank and Axis raised rates by 35 and 15 basis points, respectively, for similar tenors. 

IDFC First Bank and Kotak Mahindra Bank have been the most aggressive. IDFC First raised its savings deposit rate by a percentage point to 6% in May, offering 6% on deposits of over ₹10 lakh, besides hiking the term rates. 

“We felt that given that market rates are even ahead of the regulatory hike, the saver also needs to look at a more reasonable return,” said Shanti Ekambaram, group president-consumer banking at Kotak Mahindra Bank. “This is in anticipation of a future rate hike; we will see how the market moves, demand-supply takes place, how the liquidity is in the system, and based on that we will take further decision.” 

The RBI has raised its benchmark repo rate twice in the past two months, by a cumulative 90 basis points to 4.9%, and has guided for a further hike amid hardening inflationary pressures. 

Important Links:

Recommended for you ...

Reserve Bank to promote rupee as preferred currency for global trade
Reserve Bank to promote rupee as preferred currency for global trade

August 09, 2022

IDFC First Bank partners LetsVenture to support start-ups
IDFC First Bank partners LetsVenture to support start-ups

August 09, 2022

SFB allowed to offer more forex products
SFB allowed to offer more forex products

August 09, 2022

Chat on WhatsApp