CENTRAL BANK OF INDIA RAISES DEPOSIT RATES

Central Bank of India on Thursday substantially upped interest rates on fixed deposits by up to 175 basis points on various maturities.

Faced with a liquidity crunch, banks (on an average they have collectively borrowed over Rs 1 lakh crore daily from the Reserve Bank of India over the last few weeks to tide over the liquidity crunch) are raising their FD rates to attract more deposits.

Central Bank has effected the highest interest rate increase of 175 basis points (100 basis points equals one per cent) on deposits in two maturity buckets — 15 to 45 days (new deposit rate: 5 per cent); and 180 to 269 days (8 per cent).

The interest rates on FDs in the 46 to 90 days and 270 to 364 days have been raised by 150 basis points each to 5.75 per cent and 8 per cent respectively.

Deposits in the five years to less than seven years tenure will fetch 8.60 per cent interest, 100 basis points more that the earlier rate.

FDs in two maturity buckets — one year to less than two years (new interest rate: 8.25 per cent) and three years to less than five years (8.50 per cent) — will attract 90 basis points higher interest.

Deposits in the two years to less than three years (new interest rate: 8.25 per cent) and seven years and above (8.60 per cent) maturity brackets will earn 75 basis points more interest.

The public sector bank's 555 days deposit scheme will fetch 8.55 per cent interest.

Kotak Mahindra, Lakshmi Vilas

Meanwhile, Kotak Mahindra Bank has increased the interest rates on FDs of select maturities by up to 50 basis points.

Lakshmi Vilas Bank has also upped interest rates on FDs by up to 125 basis points. The highest interest rate that the private sector bank is offering is 9 per cent on deposits in the two years to less than three years maturity bucket.

SOURCE: http://www.thehindubusinessline.com/2010/12/10/stories/2010121051600600.htm