Kotak ups deposit rates,others to follow

Also,the rates for 7-14 days deposits has been lifted to 3 per cent from 2 per cent earlier to adjust it in line with savings deposit rate.

“We have increased deposits in majority of the maturities by 0.25 per cent in view of the RBI policy rate hikes early this week and considering the current market situations,” Kotak Mahindra Bank’s Group President,Treasury,Mohan Shenoy said here.

“We are still watching the market and would take further actions if necessary,” Shenoy said. He said the hike in 7-14 days deposits was just to bring the rate close to savings account deposit rates and was not due to the hike in RBI policy rates.

A host of private and state-owned banks like Union Bank of India,Bank of India and Axis Bank are likely to up their deposit rates by 0.25-0.5 per cent in the next few days,taking a cue from the Reserve Bank’s monetary action earlier this week.

Senior officials of these banks said their asset liability committees will meet in the next few days to decide on the quantum of rate hike on deposits across various tenor,asserting that they are watching the market movements closely.

To fight inflation,the Reserve Bank on Tuesday hiked its overnight lending rate (repo) by 0.25 per cent to 5.75 per cent and the reverse repo,at which it absorbs deposits,by 0.5 per cent to 4.5 per cent.

Wholesale inflation,which stood at 10.6 per cent in June,has been hovering in double-digits since February.

On Wednesday,Bank of India Executive Director M Narendra said the bank is likely to increase its deposit rates by up to 0.5 per cent in the near future.

Axis and Union Bank officials also hinted at a similar hikes in deposit rates to attract more resources from investors.

Banks,which have already hiked their deposit rates this week include HDFC Bank,Lakhsmi Vilas Bank and Central Bank of India.

Earlier this week,State Bank Chairman O P Bhatt indicated that the bank may look at revising its deposit rates by August-September.