JOIN USState Bank of India (SBI), on Monday, raised interest rates on term deposits by 50-150 basis points with maturities ranging from 15 days to 10 years upwards.
The new rates, effective December 7, are expected to give better returns to people with fixed deposits in the bank and set to give a further boost to savings in the country. SBI made no change in lending rates.
For term deposits of 46 days to 90 days, SBI has hiked the rate from 4.0 to 5.50 per cent, while for 91-180 days tenure deposit rates have gone up from 5.50 to 6 per cent and 181 days to less than one years the rate has been revised to 7.25 per cent from the existing 6.0 per cent.
SBI has pegged the new interest rate at 7.75 per cent (as opposed to earlier rate of 7.0 per cent) for deposit of 1 year to 554 days tenure and for 555 days tenure-deposit to 8.50 per cent from the earlier 7.50 per cent. With this rate hike, cost of funds for SBI are likely to go up marginally and is bound to have an impact on net interest margin. SBI don’t see any further hike in deposit rates till the end of this fiscal, unless the situation in the economy changes drastically.
In fact, SBI Chairman O P Bhatt had earlier hinted at the rate hike saying: Deposit rates could go up by 50 basis points or more. He had indicated slight uptick in demand for credit and said: If credit growth picks up, more deposits can be attracted into banking system by better pricing which is beginning to happen. In the current situation, deposit rates can only go up.
Bank of India (BoI) too has effected upward revision in interest rates on deposits in some maturities by about 100 basis points with immediate effect. Deposits upto Rs 1 crore (minimum deposit of Rs 1 lakh) with maturity of 1-2 years will now attract an interest rate of 8.25 per cent as against earlier 7.5 per cent and those with maturity of 2-3 years will also earn an interest of 8.25 per cent as against 7.25 per cent.
Similarly, deposits of Rs 1-5 crore with a maturity of 1-2 years and 2-3 years will see an upward revision in the interest rates. The new interest rate for both will be 8.25 per cent as against the earlier 7.75 and 7.25 per cent respectively.