SBI hikes retail deposit rates by 5-25 bps

State Bank of India (SBI) on Monday raised interest rates on retail fixed deposits (FDs) of some maturities by 5-25 basis points (bps). One-year FDs at the bank will now yield 6.65% for general deposit-holders, up from 6.4%. Senior citizens will earn 7.15% on deposits with the same maturity, as against 6.9% earlier. Deposits maturing between two years and three years will now yield 6.65%, 5 bps higher than earlier. For senior citizens, they will earn 7.15%, up from 7.1% earlier.

Rates on deposits of all other maturities remain unchanged.

Banks have taken to raising deposit rates in recent months amid competition from mutual funds and hardening bond yields. Since November 2017, the base effect of demonetisation has also begun to kick in, leading to deposit growth hitting multi-year lows. Between November 2017 and March 2018, deposits have grown by 3-7% on a fortnightly basis, according to data released by Reserve Bank of India (RBI).

Earlier this month, Axis Bank revised rates on retail FDs of some maturities. Last month, HDFC Bank, the country’s largest private lender by assets, had hiked retail deposit rates by up to 100 bps. This is the second round of deposit-rate hikes by SBI in 2018, with the last one having come in February.

Anshula Kant, deputy managing director and chief financial officer, SBI, had told FE in February that the bank had been seeing huge outflows because of relatively lower deposit rates. Loan rates, however, are unlikely to rise further from their current levels, Kant added. “We are seeing a pick-up in credit growth and that will aid expansion in margins from here on,” she had observed.

State Bank of India