IDBI Bank announced an increase in the interest rate on certain retail term deposit schemes by up to 75 basis points, in line with similar steps by its peers.
The interest rates were hiked for deposits of both less than Rs 15 lakh as well as those of between Rs 15 lakh and up to Rs 1 crore.
In an additional offering to woo customers in the current stage when interest rates are on an upswing, IDBI Bank has decided to do away with penalties on premature withdrawals of fixed deposits. Currently, the bank levies a premature withdrawal penalty of 1 per cent.
In a rising interest rate scenario, customers prefer shifting their deposits to a bank offering higher interest rates and withdrawal of the penalty will help the bank attract more deposits.
Fresh deposits and renewals made after January 1, 2011 will not be charged a withdrawal penalty, the bank said.
The rate hike announced is from immediate effect and with the revision, the highest interest on retail term deposits would be 9.25 per cent.
For deposits of up to Rs 15 lakh, the maximum hike is of 75 basis points.
The interest rate on deposits with a maturity period of 270 days and above, but less than one year, has been increased by 75 basis points to 8 per cent.
Furthermore, the rates for deposits with a tenor of between one year plus one day and 499 days have been hiked by 35 basis points to 8.50 per cent.
For retail term deposits with a maturity period of 500 days, the bank has revised the interest rate to 9 per cent, up 50 basis points from the prevailing rate.
Another major hike will be effected on deposits with a tenor between 500 days and 1,099. The rate of interest on such retail term deposits has been increased by 75 basis points to 9 per cent.
Besides, for deposits with a maturity of 1,100 days, the new rate will be 9.25 per cent, up 50 basis points.
For deposits of up to Rs 15 lakh with a duration of seven year to ten years, the rates have been revised upward by 25 basis points to 8.75 per cent.
Other lenders such as Dena Bank, Kotak Mahindra Bank, State Bank of India and HDFC Bank among others have already hiked their retail term-deposit rates.
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