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Lenders increase deposit rates, bring savers cheers
January 31, 2022
Deposit rates are rising across the board as banks are following NBFCs, which have taken the lead in the competition for funds.
The country’s largest lender SBI hiked deposit rates on FD’s twice a week, following closely on the heels of private lenders HDFC Bank, Axis Bank, and ICICI Bank, signaling a change in the interest rate cycle.
CEO of a large non-bank lender said, “It’s quite clear that lenders are factoring in a turn in the rate cycle in near future, especially NBFCs, which are starved for liquidity”.
They are firming up plans to renegotiate most term loans that are coming up for renewal at the end of March.
SBI recently raised its deposit rates by 10 basis points. ICICI Bank, HDFC Bank, Canara Bank, and Axis Bank have made similar rate hikes with more lenders expected to follow.
SBI has hiked the interest rate of FDs below ₹2 crore with a timeline of one year to less than 2 years by 10 basis points.
The RBI has so far maintained the status quo on key rates in a bid to boost growth. But as core inflation remains stubbornly high, the Street expects the central bank to start hiking rates soon. The cycle could well turn with a possible rise in reverse repo rate, at which banks park short-term surplus funds with the RBI.
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