The country’s largest lender, State Bank of India (SBI), has raised the interest rate on its bulk term deposits (Rs 2 crore and above) by 40 – 90 basis, effective May 10.
Consequently, deposits of Rs 2 crore or above for 5–10-year tenor and 3-5-year tenor will fetch an interest rate of 4.50 per cent as against 3.60 per cent earlier, a hike of 90 bps, according to SBI’s website.
Bulk deposits for 2-3-year tenor will now fetch an interest rate of 4.25 per cent versus 3.60 per cent earlier, and deposits in the 1 – 2-year bucket will have an interest rate of 4 per cent as against 3.60 per cent earlier.
Further, bulk deposits for 46 – 179 days’ tenor and 180 – 210 days’ tenor will fetch an interest rate of 3.50 per cent while deposits with 211 days to less than a year tenor will have an interest rate of 3.75 per cent.
The revised rates of interest shall be made applicable to fresh deposits and renewals of maturing deposits. The interest rates on NRO term deposits shall be aligned as per the rates for domestic term deposits, the bank said.
The hike in interest rate on deposits comes after the monetary policy committee (MPC) hiked benchmark interest rate (repo rate) by 40 basis points to 4.40 per cent, in an off-cycle meeting to tame the rising headline inflation.
A senior SBI executive said, revision in bulk deposit rates is in line with the hike in the policy repo rate. Plus, there is clear indication of liquidity in the system coming down over a period of time and deposit rate hike on bulk money is sort of preparation to avoid challenges on the resources front in the coming months.
Bulk counters have become active again, the system has been flush with funds for the last two years but the picture will change as RBI incrementally withdraws accommodation, the executive added.
A bunch of banks, including Bandhan Bank, Kotak Mahindra Bank, Jana Small Finance Bank, Bank of Baroda, ICICI Bank, and Punjab National Bank have also announced deposit rate hikes across multiple tenor baskets for retail customers, following MPC’s decision.
Consumer financier Bajaj Finance has raised interest rates by upto 10 basis points on its fixed deposits (upto Rs 5 crore) for tenor between 36 months to 60 months, effective from May 10. The revised interest rates will be applicable to fresh deposits as well as renewals of maturing deposits.