With inflation close to the 8 per cent level, State Bank of India has revised upwards interest rates on deposits of two years and more with effect from June 1. The hike has come less than a month after the Reserve Bank of India announced a 0.25 per cent hike in cash reserve ratio in the annual monetary policy review in April.According to bankers, it is too early to predict a rise in lending rates, but things are moving in that direction. “Liquidity was sucked out after two rounds of CRR hikes in the past two months. Lending rates will go up if there’s a liquidity crunch,” said one. However, SBI has not touched deposits in the short- and medium-term category. “With inflation at over 7 per cent, the bank has to pay more to depositors to attract resources,” said a senior SBI official. On whether a similar hike is on the cards for lending rates, the official said the bank has no immediate plans. “We will not face an asset-liability mismatch as we have not increased our short-term and medium-term rates. At best, it would affect us by one or two basis points,” he said. Deposits of 2 years to less than 3 years would earn an interest of 8.75 per cent, the same as deposits of one year to less than 2 years. Interest rates on deposits of 3 years to less than 5 years were increased to 8.85 per cent from 8.5 per cent. Interest rates on deposits of 5 years and up to 10 years will be 9 per cent as against 8.5 per cent at present. For senior citizens, the deposits of 2 years and up to 10 years have been bifurcated into two categories of deposits of 3 years to less than 5 years and 5 years to 10 years, SBI said. Interest rates on the new buckets will be 9.35 per cent and 9.5 per cent as against 9 per cent earlier. Interest rates on senior citizen deposits of one year to less than 2 years will continue to be 9.25 per cent.
