Deposit rates likely to come down

Lately the fixed deposit rates experienced a constant hike due to inflation but according to experts the deposit rates are likely to come down in the time to come. Few banks have already started to lower the deposit rates offered by them.

The Chairman and Managing Director of Bank of Baroda Mr. MD Mallya said "I think the deposit rates may come down. As far as lending rates are concerned, we will have to wait for the RBI policy before taking a call on it."

The Research Head at StanChart Mr. Samiran Chakrabarty said “Generally during the first half of the fiscal the credit demand is leaner and we are also seeing an easing of the liquidity situation. This, along with the fact, that towards the fiscal-end and April banks have incremental capital may be the reason for cut in rates."

The Reserve Bank of India is going to announce annual credit policy for 2011-12 on May 3 and is expected to hike the lending rates further by 25 basis points. Presently the short-term lending (repo) rate now stands at 6.75% and the borrowing (reverse repo) rate at 5.75%

Experts believe that the dip in the deposit rates is not likely to stay for a very long time.

NRE deposit rates hiked by SBT

State Bank of Travancore has hiked the NRE deposit rates. The bank has brought the hike in interest rates across various maturities.

Following the revised rates the interest rate on a maturity period of one year to less than two months will be 2.54 percent, a maturity of two years to less than three years will attract an interest rate of 2.66 percent, and that for a maturity of three years to five years will fetch an interest rate of3.19 percent.

The bank as also hiked the FCNR deposit rates for deposits in dollars and Euros for various maturity periods.

The revised interest rates are effective from March 2.

OBC raises deposit rates over selected maturities

Oriental Bank of Commerce has announced a raise in the fixed deposit interest rates over selected maturity periods by 50 basis points.

The bank has hiked interest rates on selected maturities of 1 year to 499 days and 501 to 2 years from 8.50 to 9.00 percent.

Most of the other leading banks have already raised their deposit rates after RBI hiked key lending rates by 50 basis points.

The new rates will be effective from 7^th March 2011.

City Union Bank offers online term deposits

City Union Bank has started the introduction of more of modern technology to its banking system to expand its business and also to facilitate the customers. The bank customers will now be able to open deposit accounts online.

The Executive President of City Union Bank Dr. N Kamakodi said “The idea struck when I noticed that people by and large went for online booking of rail tickets. So, we decided to offer our entire gamut of services on the electronic platform, except for say, operating the locker, which obviously requires the physical presence of the account holder.”

The customers will be given option to transfer funds from their saving account to their deposit account. Apart from that the customers will be allowed to avail loans against those deposits.

He also said “The response has been phenomenal and quite unexpected, considering that we did not advertise about this offering. It was there on our site though. Within a week of its introduction, our online collection of term deposits swelled to about Rs 1 crore.”

The bank has also tied with the State Electricity Board, after the development the customers can pay their electricity bills online. According to the bank the practice is gaining popularity amongst customers.

Dr. Kamakodi said “We find that more and more people from rural pockets are now comfortably using Netbanking services,”

Dhanlaxmi Bank hikes deposit rates

Private sector lender Dhanlaxmi Bank has announced a hike in the deposit rates across various maturities. The bank has hiked the deposit rates by a maximum of 3 percent.

The head of banks branch banking and NRI Businesses Mr. Salil Datar said "The hike in interest rates is in line with market trends and the emerging market interest rate scenario."

After the hike, the deposits for the maturity period 46 to 90 days will attract an interest of 9 percent and on deposit for maturity period of 91 to 179 days the customers will earn an interest rate of 8.75 percent compared to 7.25 percent.

Deposit rates expected to rise by 100 basis points this year

According to a study conducted by Care Ratings, the banks in India might have to raise the fixed deposit rates by around 100 basis percent or 1 percent in the next one year.

According to the study “The banking sector has to garner 41 per cent more money in the form of new deposits in CY2011 than what they had done in CY2010 to maintain the credit growth momentum…..This would put upward pressure on the interest rates offered on deposits.”

The commodity prices and spending on infrastructure is expected to rise further this year and it will keep the banks under continuous pressure.

The agency also expects that to ease the liquidity situation the banking regulators might have to cut the cash-reserve ratio by more than 200-250 basis points.

Hike in deposit rates of Dhanlaxmi Bank

Dhanlaxmi Bank , a leading South Indian private sector bank has announced a hike in fixed deposit rates. The bank raised the deposit rates by up to 50 basis points or 0.50 percent over various maturities on deposits between Rs 15 lacs to 1 crore.

Earlier the bank hiked the deposit rates on 20^th January 2011. A few other banks have already raised their deposit rates in reaction to the announcement of the tightening of the monetary policy by The Reserve Bank of India.

The new rates are in effect from today itself.