As per expectations, SBI has been the frontrunner in reversing the downward trend on retail deposits by hiking interest rates by 0.1-0.5% across various maturities. The rates shall be effective from Wednesday i.e. February 28, 2018 and this move shall be followed by other banks too.
For its one year deposit, the bank will now offer an interest rate of 6.4% in comparison to the earlier 6.25% while those term deposits that would mature between 2 and 10 years shall now be fetching 6.5% as against 6% previously. Senior citizens shall be eligible for additional return of 0.5%.
1 bps is one-hundredth of a percentage point.
The main reason for the reversal in interest rates is on the premise that while the credit growth is seeing an uptick, the banking industry is facing tightened liquidity.
In a notification, the bank said, "The proposed rates of interest shall be made applicable to fresh deposits and renewals.
Also, the bank has increased rates on bulk deposits of above Rs. 1 crore to Rs. 10 crore and also on deposits over Rs. 10 crore.
Bulk deposits of 1 year- 55 days will now earn 6.75% as against 6.25% earlier while deposits of 5 years and upto 10 years will now earn 6.25% as against 6% earlier.