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Banks begin hiking deposit rates

Banks begin hiking deposit rates
Contrary to market belief that interest rates are falling, some banks have hiked their deposit rate, suggesting that demand for credit remains robust.

Late last month Dena Bank hiked its deposit rates. According to a release issued by the bank increased rates were hiked on term deposits by 0.35 per cent for maturity period of one year to less than two years.

Corporation Bank on the other hand is offering a special 555 day deposit called Corp Power Plus, where the interest rates are 9.10 per cent. This is marginally higher than any of the other deposits of the company.

Axis Bank, has also raised rates from 9 per cent to 9.25 per cent for select deposits.

While industry is hankering for the RBI to reduce interest rates, it seems demand for credit continues to be robust. Asset liability match has also prompted some of these banks to increase interest rates.

Though the RBI has reduced the repo rate by 50 basis points last year and also reduced the CRR, interest rates have not gone down significantly.

Analysts are however suggesting that with inflation likely to come down there maybe a series of interest rate cuts, which is why it could be an ideal time to lock into term deposits with a longer tenure.

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