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A clutch of banks increased their lending and deposit rates on Thursday following the hike in key short-term rates by the Reserve Bank of India last month.
The central bank, in its third quarter review of monetary policy, had warned banks that they need to increase their deposit rates to attract more investors. While loans are growing at a healthy clip, deposits accretion has not kept pace with this growth.
Among the banks that announced rate hikes today were Bank of Baroda, which increased the Benchmark Prime Lending Rate (BPLR) to 13.75 per cent (13.25 per cent) and Base Rate to 9.5 per cent (9 per cent). The bank had hiked deposit rates by 25-50 basis points a couple of days ago.
Private sector bank, Kotak Mahindra Bank hiked interest rates on term deposits for certain maturities by up to 50 basis points. The highest rate the bank is now offering is 9.25 per cent for 700-days deposit.
Bank of India also hiked interest rates on deposits of certain maturities, after it had hiked its BPLR by 50 basis points, earlier this week. Union Bank of India also hiked its Base Rate to 9.5 per cent (9 per cent) and deposit rates across some maturities by 75-150 basis points, it said in a press release issued to the Bombay Stock Exchange. The highest rate the bank is offering is 9.15 per cent for 1100-day deposit.
Other Bureaus add: Allahabad Bank has increased base rate by 50 basis points from 9 per cent to 9.50 per cent and the BPLR by 25 basis points to 13.50 per cent (13.25 per cent). Interest rate on domestic term deposits for fixed 400 days has gone up from 8 per cent to 8.50 per cent for fresh deposits below Rs 1 crore, according to a press release.
Andhra Bank said it will increase both Base Rate and BPLR by 50 basis points from February 5. The revised Base Rate is 9.50 per cent (9 per cent) and the revised BPLR is 13.75 per cent (13.25 per cent).
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