Banks up deposit rates again

In tune with the rising yields in the government securities market, Bank of India and Vijaya Bank have raised deposit rates for the second time in as many weeks by 25-100 basis points. (One basis point is one hundredth of a percentage.)

Bank of India has raised the long term deposit rate and reduced the short-term rate by 25-50 basis points.

According to a Bank of India official, "The rates in the market have gone up with the ten-year government bond at a yield of 7.22 per cent. We think this is the best time to raise long term resources."

The new rates to be effective from December 1. On deposits below Rs 15 lakh, the 7-14 days deposit will then fetch 3.00 per cent (3.50 per cent), the 15-45 days 4.00 per cent (4.50 per cent), 46-90 days 4.50 per cent (5.00 per cent), 91 to 179 days 4.75 per cent (5.00 per cent). The 180 to 364 days deposit rate will remain unchanged at 5.00 per cent and so will the 1 year to less than 2 years rate at 5.25 per cent.

Two years to less than three years rate will be raised to 5.50 per cent (5.25 per cent), the 3 years to less than 5 years will be at 5.75 per cent (5.50 per cent) and the 5 years and above will be at 6.00 per cent (5.75 per cent).

Bank of India has also introduced higher rates for bulk deposits (above Rs 15 lakh and up to Rs 10 crore. High value deposits will get 25-50 basis points more than the below Rs 15 lakh category.

Vijaya Bank has significantly raised rates with the 15-45 days deposit at 5.00 per cent (4.00 per cent) and the 5 years and above at 6.50 per cent (6.00 per cent). Vijaya Bank has also raised home loan rates by 25-50 basis points with the over ten year fixed rate at 9.00 per cent (8.50 per cent).

Bank of India's hike makes it on par with State Bank of India (SBI) which hiked deposit rates on Saturday. SBI's 7 to 14 days deposit fetches 3 per cent returns, the 3 years to less than 5 years 5.75 per cent (5.25 per cent). SBI's 5 years & above deposit is more attractive than BoI's at 6.25 per cent (5.25 per cent).

Meanwhile, Syndicate Bank has also revised upwards interest rate on domestic term deposits by 25 to 50 basis points. Deposits with a maturity period between one year and two years will carry a maximum interest rate of 5.50 per cent compared to 5 per cent earlier.

Interest on deposits between two and three years will go up from 5.25 per cent to 5.50 per cent, while interest on over three-year deposits will increase to 5.75 per cent from 5.50 per cent.

The interest rate on deposits that mature after 180 days but before one year has gone up to 4.75 per cent to five per cent. Rates for short-term deposits of up to 46 days and 179 days will now carry an interest rate of 4.25 per cent and 4.75 per cent, respectively, up from 4 and 4.50 per cent earlier.

The Jammu & Kashmir Bank has revised interest rates on domestic term deposits by 0.25 per cent to 0.75 per cent, effective from December 1. The term deposits in 7-14 days maturiry slab, interest rate, however, would continue to be at 3 per cent.