New Delhi: Following the Reserve Bank of India’s (RBI) unplanned hike in the key policy rate on May 4, a number of banks have boosted their fixed deposit interest rates.
Bandhan Bank, Kotak Mahindra Bank, Jana Small Finance Bank, Bank of Baroda, and ICICI Bank are among the lenders. These lenders have raised deposit rates for retail clients across multiple tenor baskets.
In a statement, Kotak Mahindra Bank said it has boosted fixed deposit interest rates by 30 basis points for 390 days and 35 basis points for 23 months, respectively. Bandhan Bank, meanwhile, increased the interest rate on deposits by 50 basis points for one year to 18 months, and above 18 months to less than two years.
This comes after banks raised loan rates. Several banks have already raised their lending rates. Bank of Baroda and ICICI Bank are two of them. The external benchmark lending rate at ICICI Bank has been hiked by 40 basis points to 8.10 percent.
Analysts predict more banks may soon announce increases in lending and deposit rates.
Since the start of the pandemic in 2020, the central bank lifted the repo rate by 40 basis points to 4.4 percent on May 4, the first time in two years. This RBI move could affect the people with loans and it is seen as good news for FD investing.
“Because roughly 40% of banking system loans are connected to REPO, any increase in REPO by the same amount will make all of them costlier,” said Prakash Agarwal, a banking expert and president of financial services at India Ratings and Research.