In an effort to grab a share of the hefty Diwali bonus to employees in government and corporate sector, country’s largest lender State Bank of India may raise the interest rate on term deposit rates in next few days.
“Bank may revise hike interest rate on term deposits only during festive season to get funds from people who will get bonus money. This is also will time build liquidity to manage rise in credit uptake from the third quarter” Senior SBI official said. The asset liability committee would take a decision this week, official said but did not elaborate further.
At present, bank has adequate liquidity to manage any immediate rise in demand for resources. The Statutory Liquidity ratio (SLR) is about three – four per cent over minimum level 25 per cent of deposits prescribed by Reserve Bank of India, he added.
SBI executive said bank intends to tweak rate for festival season only. However, if the rates continue to harden in system due to policy steps and pressure in liquidity remains bank will take call on continuing with enhanced rates. Ending the interest rate cut cycle which began in third quarter of 2008-09 (signifying global financial crisis), SBI raised deposit rates by 25-150 basis points in August 2010. This hike was keeping with increase in key short term rates by Reserve Bank of India.