Interest rates have begun to rise as liquidity in the system shrinks. While you will feel the pinch of costlier home and car loans, hike in deposit rates will give you some comfort.
A number of banks like SBI, PNB and IDBI Bank decided to increase deposits rates by up to 75 basis points (100 basis points = one percentage point) to cope with lower availability of funds. These banks have also decided to raise their lending rates (except SBI) to deal with costlier funds.
A number of banks like SBI, PNB and IDBI Bank decided to increase deposits rates by up to 75 basis points (100 basis points = one percentage point) to cope with lower availability of funds. These banks have also decided to raise their lending rates (except SBI) to deal with costlier funds.
Six banks, including PNB, IDBI Bank and Allahabad Bank , have hiked their base rates by up to 50 basis points, with effect from October 1, to 8.5%. Base rate acts as a benchmark to variable interest rates, at which home, auto and corporate loans are given. Hike in the base rate will also affect the existing borrowers as their effective rates will also increase by 50 basis points.
Private sector banks like Axis Bank , Kotak Mahindra Bank and Standard Chartered Bank have raised their benchmark base rates by 25 basis points. However, the SBI retained its base rate at 7.5%. As per RBI norms, banks can review their base rates every quarter. This is the first review of the rate since it was introduced in July this year to replace BPLR system to improve transparency. The base rates fixed will now continue to act as benchmark rates for the next three months. Banks can increase the lending rates for new customers without changing base rates by increasing the differentials they charge over the base rates. But they can’t increase the rates for old customers.
Large banks like SBI, PNB and IDBI increased their deposit rates to attract more depositors , who have been getting negative returns when adjusted for inflation. PNB raised its fixed deposit rates by 25-50 basis points across various maturities, while IDBI Bank hiked its rates by 15-50 basis points on various slabs.
SBI raised deposit rates by 25-75 basis points across maturities . For 91-180 days term deposits, SBI will pay 5.5% interest , higher by 75 basis points from the existing rate.
Deposits rate with maturity period between one year and 554 days has been raised by 25 basis points to 7%, while deposits for 555 days would attract 7.5%. The rates on term deposits of between 556 days and 1,000 days, under different slabs, have been increased by up to 50 basis points, going up to 7.75%.
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