SBI, PNB raise fixed deposit rates

PTI

Mumbai, 01 October 2010: Two major public sector lenders, SBI and PNB, today hiked fixed deposit rates by up to 75 basis points, while PNB also increased its base rate - below which banks can’t lend - to 8.5 per cent.

 

SBI, however left its base rate unchanged at 7.50 per cent. As per RBI norms, banks review their base rates every quarter. This is the first review of the rates since it was introduced in July this year.

 

On the other hand, the banks’ decision to increase deposit rates, which would be followed by other lenders, follow the Reserve Bank’s concerns that lenders are not attracting enough depositors.

 

All new rates take effect from today.

 

State Bank of India (SBI), the country’s largest bank, has decided to raise deposit rates from 25-75 basis points (0.25-0.75 per cent) across various maturities. For 91-180 days term deposits, SBI will pay 5.5 per cent interest, up 75 basis points from the existing rate.

 

 

Fixed deposits with maturity period between 1 year - 554 days have been raised by 25 basis points to 7 per cent, while deposits for 555 days would attract 7.5 per cent.

 

The interest rate on term deposits of between 556 days and 1,000 days, under different slabs, has been increased by 50 basis points, going up to 7.75, SBI said in a statement.

 

Punjab National Bank (PNB), meanwhile, raised its base rate from 8 per cent to 8.50 per cent in response to RBI’s hike in the policy (lending and borrowing) rates for banks on September 16, and the subsequent impact on cost of deposits.

 

Base rate is the minimum lending rate below which bank cannot offer loans. The benchmark prime lending rate would remain intact at 11.75 per cent, PNB said in a statement.

 

It said that taking note of the negative real rates to the savers, in view of high inflation, interest on fixed deposit have also been increased by 25-50 basis points across various maturities.

 

The maximum rates offered by PNB now is 8 per cent for deposits of maturity between 8 and 10 years, while for SBI it is 7.75 per cent for fixed deposit of 1,000 days and 8-10 years.

 

For 1-3 years term deposit, PNB will pay 7.5 per cent interest, an increase of 25 basis points.

 

Fixed deposits with maturity period between 271 days to 1 year has been raised by 50 basis points to 6 per cent, while 5-8 years term deposit would attract 7.75 per cent interest rate.