With rising competition for mobilising resources amongst banks, the State Bank of India has raised interest rates by 15-100 basis points on domestic term deposits, including bulk deposits, effective today. For bulk deposits (amounts Rs two crore and above), the maximum increase is in short-term money (up to one year).
The 100 basis points hike is for a 180-210 days bucket where the revised rate is 5.5 per cent per annum as against the old rate of 4.5 per cent per annum. The retail deposits, amounts up to Rs two crore, in the same bucket remained unchanged at 5.25 per cent, according to the rate card on the SBI website.
SBI said for 07-45 days bulk deposits; it will pay 4.25 per cent, up from 3.5 per cent. In bulk deposits, one year to less than two years will now attract a rate of 6.5 per cent, up from 6.0 per cent. Two years to less than three years will have a 5.75 per cent rate as against the old 5.25 per cent. The rates for three years to less than five years are also 5.75 per cent (5.25 per cent old).
Bankers said the gap between year-on-year growth in deposits and advances is wide now. This has pushed banks to increase interest rates and also step up efforts across branch networks and digital platforms for mobilising resources.
According to Reserve Bank of India data, banking systems deposits stood at Rs 172.9 trillion on November 18, 2022, registering a growth of 9.6 per cent year-on-year (YoY). The outstanding credit stood at Rs 129.47 trillion, registering 17.2 per cent YoY growth.
Meanwhile, in absolute terms, bank deposits have increased by Rs 15.2 trillion over the last twelve months. The credit has expanded by Rs 18.98 trillion in the same period.
Rating agency CareEdge said the liquidity has generally been trending down, with RBI seeking to reduce excess liquidity from the system to manage inflation. The banking system liquidity surplus has narrowed to around Rs 1.5 trillion from Rs 6.3 trillion at the start of FY23.