 "SBI, state bank of india")
With fierce competition among banks to raise money, State Bank of India (SBI) has hiked interest rates on retail and bulk deposits upto 50 basis points (bps) across different maturities, effective Wednesday.
“The bank has to offer a fair deal to the depositors also. We don’t want to compromise the interest. As far as deposit is concerned, it has got a franchise value as we are more than 200 years old. We have to take care of our depositors too. That is the reason why we have done some calibration in terms of interest rates”, said SBI chairman Dinesh Khara, in response to a query from the media at its Banking and Economic conclave.
The revised rate for 7-45 days bucket was 3.5 per cent, up from 3 per cent, and for 211 days to less than a year, the new rate is 6 per cent, up from 5.75 per cent.
Term deposits up to Rs 2 crore are categorised as retail deposits and those above it are considered bulk deposits.
Asked if this rate hike would set a trend in the banking industry, Khara said “I don’t think so. It will be a decision taken by banks depending on their individual positions. Yes, we had some elbow room available. So, that’s the reason we have done this.”
Bank credit is expanding at a much higher space compared to the rate of deposit mobilisation.
While banking system credit rose by 16.4 per cent year-on-year (Y-o-Y), deposits were up by 12.7 per cent as of December 1, according to Reserve Bank of India data.
