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ICICI Bank has upped fixed deposit rates by up to 50 basis points. It has also increased lending rates by 50 basis points to protect its margins.
The increase in interest rates on the assets and liabilities follows tightness in liquidity in the banking system.
Late January, the central bank had raised the interest rates at which it lends to and borrows from the banking system by 25 basis points to curb mounting inflationary pressures.
The regulator infuses liquidity into the banking system at 6.5 per cent and absorbs excess liquidity from banks at 5.5 per cent.
Highest rate
The maturity buckets on which India's largest private sector bank will pay the highest interest of 9.25 per cent each are: 590 days, 790 days and 990 days. These rates are almost comparable with those offered by public sector banks.
Smaller old generation private sector banks, however, are offering higher interest rates on FDs in the current high interest rate scenario. For example, Lakshmi Vilas Bank and Karnataka Bank offer 10.10 per cent interest and 9.75 per cent, respectively, to FD depositors for one year to less than two years; and Karur Vysya Bank is quoting 10.25 per cent interest on 555 days FDs.
On the lending side, ICICI Bank has announced an increase of 0.50 per cent in its base rate to 8.75 per cent. With effect from July 1, 2010, interest rates on new loans and advances, including consumer loans, are determined with reference to the base rate. It has also announced an increase of 0.50 per cent in its benchmark prime lending rate and in its floating reference rate for consumer loans (including home loans) to 17.5 per cent and 14.5 per cent, respectively.
A host of big banks, including State Bank of India, Punjab National Bank, Bank of India, and Bank of Baroda, have already upped their deposit and lending rates.
All rate hikes are effective from February 24, 2011, the bank said in a statement.
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