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Banks lure depositors with higher rates ahead of the festive season
October 16, 2023
Banks are gearing up for the festive season by increasing their efforts to attract deposits and raising interest rates. Bank of Baroda recently upped its rates for retail term deposits, with a maximum hike of 50 basis points over three years. UCO Bank introduced a special 7.05% scheme for a 400-day term. Bank of Maharashtra also increased rates, notably by 125 basis points for 45–90-day deposits, reaching 4.75%. Deposits lasting over a year will see a 25-basis point rise, going up to 6.25%. For deposits over three years, the rate will be 6%. This surge in deposit rates coincides with the Reserve Bank of India’s ongoing efforts to adjust the policy repo rate.
Banks are also preparing for a substantial increase in retail loans during the festive season. Larger banks predict a 20-25% growth, while smaller ones hope for a 30-35% rise. Customers are expected to seek personal, auto, and home loans, taking advantage of festive deals. This trend is set to boost banks’ financial performance in the third quarter. Over the years, banks have been expanding their retail loan portfolios, now constituting 33% of total credit. This uptick in loans is a traditional trend during the festive season, with customers capitalizing on discounts offered by companies while making purchases.
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