The country's largest lender, State Bank of India ( SBI) raised fixed deposit rates on select maturities by up to 1%, amid tight liquidity situation.
Fixed deposits with maturity period of 7-90 days will earn 8% interest against existing 7%, SBI said in a statement.
The new rates would be effective from today (March 28, 2012).
Interest rates on 91-179 day and 181-240 day period fixed deposits have been raised by 0.75% and 1%, respectively. The rate of interest will be 8% now.
Interest rate on 241-day to one-year deposits has been raised by just 0.25% to 8%.
SBI becomes the fourth public sector bank to increase fixed deposits rates this month, a move others will follow.
The bank has left interest rates on fixed deposits beyond one-year maturities unchanged.
SBI last revised its fixed deposit rates in August 2011.
Earlier this month, Bank of Baroda and Bank of India had also raised deposit rates.
According to analysts, hike in fixed deposits rate of short-term maturities is mainly because of tight liquidity situation in the system.
Tight liquidity situation in the system had forced banks to borrow over Rs1.90 lakh crore from the Reserve Bank of India ( RBI).
Borrowing through liquidity adjustment facility ( LAF) touched a high of Rs1.95 lakh crore, breaking a previous record set earlier this year following advance tax payment.
To improve liquidity in the system, RBI had earlier this month reduced the cash reserve ratio ( CRR) -- the portion of deposits banks require to keep with the central bank -- from 5.5% to 4.75% to inject Rs48,000 crore in the economy.
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Fixed deposits with maturity period of 7-90 days will earn 8% interest against existing 7%, SBI said in a statement.
The new rates would be effective from today (March 28, 2012).
Interest rates on 91-179 day and 181-240 day period fixed deposits have been raised by 0.75% and 1%, respectively. The rate of interest will be 8% now.
Interest rate on 241-day to one-year deposits has been raised by just 0.25% to 8%.
SBI becomes the fourth public sector bank to increase fixed deposits rates this month, a move others will follow.
The bank has left interest rates on fixed deposits beyond one-year maturities unchanged.
SBI last revised its fixed deposit rates in August 2011.
Earlier this month, Bank of Baroda and Bank of India had also raised deposit rates.
According to analysts, hike in fixed deposits rate of short-term maturities is mainly because of tight liquidity situation in the system.
Tight liquidity situation in the system had forced banks to borrow over Rs1.90 lakh crore from the Reserve Bank of India ( RBI).
Borrowing through liquidity adjustment facility ( LAF) touched a high of Rs1.95 lakh crore, breaking a previous record set earlier this year following advance tax payment.
To improve liquidity in the system, RBI had earlier this month reduced the cash reserve ratio ( CRR) -- the portion of deposits banks require to keep with the central bank -- from 5.5% to 4.75% to inject Rs48,000 crore in the economy.
....more info