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SBI raises rates on select deposits

The decision is expected to leave SBI with more funds at its disposal

By Our Special Correspondent in Mumbai

  • Published 29.11.18, 2:09 AM
  • Updated 29.11.18, 2:09 AM
SBI’s rate hike will leave it with more funds at its disposal
SBI’s rate hike will leave it with more funds at its disposal Shutterstock

The State Bank of India on Wednesday hiked its fixed deposit rates by up to 10 basis points on select maturities, following its private sector rivals HDFC Bank and ICICI Bank, who had revised their rates earlier in November.

For the SBI, the revised rates will be applicable only on two maturity buckets — 1 year to less than 2 year and 2 year to less than 3 years.

SBI’s rate hike will leave it with more funds at its disposal at a time liquidity in the system has become one of the major point of friction between the RBI and the government.

The government believes liquidity is not adequate and more needs to be done, but the RBI, which has undertaken measures such as open market operations (purchase of government securities), feels otherwise.

There have been calls for the RBI to cut the cash reserve ratio (CRR), which is the portion of banks deposits that has to be maintained with the regulator.

The hikes in deposit rates come few days ahead of the monetary policy. The Street, however, feels the monetary policy committee will leave the policy rate unchanged on December 5. Similarly, non-food credit growth has also been strong. RBI’s latest data show the adjusted non-food credit growth at 15.6 per cent.

For the SBI, the hike in rates ranging from 5 basis points to 10 basis points are applicable for deposits below Rs 1 crore and are effective immediately, the bank said on its website. One basis point is one hundredth of a per cent.

For fixed deposits maturing in one to less than two years, the SBI has revised its rate to 6.80 per cent from 6.70 per cent.

For senior citizens, the new rates for the same maturity has been increased to 7.30 per cent from 7.20 per cent.

For deposits maturing in two to less than three years, the rate has been increased to 6.80 per cent from 6.75 percent.

Senior citizens will get a rate of 7.30 per cent against 7.25 per cent on deposits with tenor of two to less than three years. The lender has kept deposits rates unchanged for other maturities.

It is offering a deposit rate of 6.80 per cent for a tenure of three years to less than five years.

Earlier, private sector lenders — HDFC Bank and ICICI Bank — had increased their deposit rates on select maturities.

ICICI Bank for instance had raised rates by up to 25 basis points. It is now offering an interest of 7.50 per cent on deposits of two to three years and 7.10 per cent on deposits of more than one year (390 days) and up to 2 years.

AllBank rate

Allahabad Bank on Wednesday said it will raise the marginal cost of fund based lending rates by 10 basis points (0.10 per cent) across tenors effective from December 1, 2018.

After the revision, one-year MCLR of the bank has increased to 8.65 per cent from 8.55 per cent, while three-year MCLR increased to 8.95 per cent from 8.85 per cent.

On shorter tenures, one-month MCLR has increased to 8.25 per cent from 8.15 per cent, while six-month MCLR rose to 8.50 per cent from 8.40 per cent.

The bank informed stock exchanges that the decision to raise the rates has been taken after a review by its Asset Liability Management Committee.

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