Indian Overseas Bank is offering the highest interest rates while others are giving 7.25 per cent to 7.30 per cent with the plans ranging between 399 to 444 days
Indian Banks including SBI, Union Bank of India, Bank of Baroda and others have increased the rate of interest on deposits to attract more retail deposits. The banks are now offering 7.25 per cent to 7.30 per cent as a return on deposits as a per a report in the Economic Times.
The change in interest rates on deposit came after Reserve Bank of India's direction in a meeting with the banks. RBI's discussion with the banks CEO took place nearly two weeks ago. The regulator stated the latest RBI data in its weekly statistical supplemented while highlighting the gap between bank credit and deposit growth on year-on-year basis. As per the data, Bank credit rose 13.9 per cent as of June 28 whereas the increase in deposits were just 10.6 per cent.
The banks following the direction have started offering special plans to attract deposits. Indian Overseas Bank is offering the highest interest rates that is 7.30 per cent for 444-day plan.
Amrit Vrishti, a 444 days Retail Term Deposit Scheme started by SBI is offering 7.25 per cent and 7.75 per cent for senior citizens. It has extended the scheme to NRI Rupee Term Deposits.
Bank of Baroda's Monsoon Dhamaka plan is offering 7.25 per cent for 399 days. Bank of Maharashtra is offering two plans to the retail depositors one for 200 days which has 6.90 per cent return on deposit and other one is for 400 days which is offering 7.10 per cent interest.
Anil Gupta, a senior vice president of financial sector rating at ICRA said, "Banks are offering higher rates for less than two years tenure. So when the interest rate cycle turns, banks would not want to be stuck with high-cost liabilities," in the ET report.
While interacting with the press Shaktikanta Das, the governor of the central bank said the rate of interest on retail deposits will remain high for some time.