Banks jack up FD interest rates

State Bank of India has hiked rates for one-year deposits to 8.25 per cent, up 75 basis points from 7.5 per cent offered earlier. The bank had originally offered 8.25 per cent to bulk deposits between Rs 15 lakh and Rs 1 crore, but later extended the same rate to retail deposits as well.

Union Bank of india has gone a step ahead. “The USP of the interest revision is introduction of new bucket of 366 days where the interest rate has been made most attractive at 8.30 per cent. This is the best in the industry,” an Union Bank official claimed.

IDBI has decided to launch a 600 days’ Term Deposit Scheme — IDBI ‘Suvidha Plus’ Fixed Deposit — at an attractive interest rate of 8.75 per cent a year. The new FD scheme, open for subscription from January 25, offers 50 basis points higher interest than its earlier 500-day tenor version. Senior Citizens, as usual, will enjoy a higher interest rate of 9.25 per cent per annum on their investments in the IDBI ‘Suvidha Plus’ FD Scheme, it says.

Said V.P. Shetty, Chairman and Managing Director, IDBI: “Investors looking for steady income over a short-to medium term horizon will find the returns from the new ‘IDBI Suvidha Plus’ Fixed Deposit very attractive. The current offer will be open for a limited period only.” ICICI Bank has raised deposit rates by 25-150 basis points across various maturities. It has introduced an 890-day deposit scheme offering 9 per cent. For bulk deposit of Rs 15 lakh to Rs one crore, it offers 8.50 per cent for one year. Bank of Maharashtra is offering 8.50 per cent on deposits for three years and 8.25 per cent for one year. It is giving the same rate for bulk deposits Rs 15 lakh for one year. Punjab National Bank has also revised the rates.

Many other banks are waiting for the RBI to unveil the monetary policy for a hike in deposit rates. “What will be more important is what RBI does with the flexibility and what RBI does on rates when they announce the quarterly review of policy on January 31,” said Ashish Agarwal, analyst, Merrill Lynch deposit rates have gone up by over two percentage points in the last two years, bringing smiles back on the faces of depositors.