Banks offer over 3-year high interest rate to raise funds through CDs

Call mkt rates at higher end of rate corridor as liquidity shrinks rapidly

Commercial banks are offering the highest interest rate in three and a half years to raise deposits from the market amid a nine-year high credit growth, a shrinking pool of surplus funds, and a series of aggressive rate hikes by the Reserve Bank of India (RBI). 

Rates on the three-month certificates of deposit (CDs) issued by public sector banks to raise funds have surged 58 basis points (bps) since September 30, when the RBI last raised interest rates, the Bloomberg data showed.

The three-month CD rates stood at 6.88 per cent as of Tuesday – their highest levels since April