State bank of In­dia hikes de­posit rates

The Pak Banker - - Front Page -

MUM­BAI: State Bank of In­dia Mon­day joined its smaller peers in rais­ing de­posit rates as len­ders suc­cumbed to cen­tral bank pres­sure to raise their de­posit rates and cut lend­ing rates to help the econ­omy ex­pand at a faster pace.

The coun­try's largest lender by as­sets Mon­day said it will raise in­ter­est rates on all its de­posits, ex­cept those ma­tur­ing in seven to 14 days.

The rates on de­posits rang­ing from 15 days to up to 10 years will be raised by 50 ba­sis points to 150 ba­sis points from Tues­day, the lender said in a reg­u­la­tory fil­ing.

State Bank of In­dia has al­ready raised de­posit rates three times in 2010 as sys­temic rates have been ris­ing in the face of stub­bornly high in­fla­tion.

The cen­tral bank has raised its key rates six times so far this year, but has since sig­naled that it will wait for its pol­icy ac­tions to cool in­fla­tion be­fore em­bark­ing on more moves.

The rate in­crease by the state-run lender comes af­ter ICICI Bank Ltd., In­dia's biggest pri­vate sec­tor lender, said Satur­day it will raise its fixed­de­posit rates by 0.25 per­cent­age points to 0.5 per­cent­age point from Mon­day. State-run Bank of In­dia also raised rates on some de­posits ear­lier Mon­day.

These in­creases come af­ter the cen­tral bank gover­nor Fri­day said banks need to raise de­posit rates, but cut lend­ing rates, a po­si­tion that im­plies banks must ac­cept lower profit mar­gins.

"To achieve our col­lec­tive as­pi­ra­tion of dou­ble-digit and in­clu­sive growth, we need to raise the level of na­tional sav­ings and chan­nel those sav­ings into in­vest­ment," Re­serve Bank of In­dia Gover­nor Duvvuri Sub­barao said at a bank­ing sem­i­nar Fri­day.

The cen­tral bank has been push­ing len­ders to raise de­posit rates for some time. -PB News

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