State Bank of India (SBI) on Wednesday raised interest rates on retail and bulk fixed deposits of some maturities by between 10 bps and 25 bps.
The rate on deposits of under Rs 1 crore maturing between two years and three years was raised by 10 bps to 6.6% and that on deposits maturing between three years and five years was hiked by 20 bps to 6.7%. Retail deposits of longer maturities will now yield 6.75%, 25 bps more than earlier. The rate on one-year retail deposits was left unchanged at 6.4%.
SBI’s closest rivals HDFC Bank and ICICI Bank pay 6.75% and 6.6%, respectively, for such deposits. Deposits of more than Rs 1 crore maturing between one year and two years will now earn 7%, up from 6.75% earlier. Anshula Kant, deputy managing director and chief financial officer of SBI, told FE that the bank had been seeing huge outflows because of relatively lower deposit rates. Loan rates, however, are unlikely to rise further from their current levels, Kant said. “We are seeing a pick-up in credit growth and that will aid expansion in margins from here on,” she observed.
SBI had raised retail deposits last month as well, followed by a hike in lending rates. Interest rates in the system have already begun to harden and analysts say the rate cycle has turned.