Now IDBI Bank is also raising deposit rates to fund strong loan demand

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At a time when banks are looking to aggressively increase deposit mobilization to fund loan demand, IDBI Bank has raised interest rates on term deposits. The lender is offering a maximum rate of 6.7% to seniors for a fixed period under a new scheme.

“The bank has also introduced a special 500-day time-limited deposit under the Amrit Mahotsav FD (Fixed Deposit) scheme, offering a maximum rate of 6.7%. Amrit Mahotsav is a limited time offer available until September 30, 2022,” IDBI Bank said. The special offer is effective from Monday.

Under Amrit Mahotsav’s offer, general customers would receive an interest rate of 6.1% for redeemable deposits and 6.2% for non-refundable deposits worth more than Rs 15 lakh . Senior citizens would receive 6.6% for refundable deposits and 6.7% for non-refundable deposits over Rs 15 lakh.

About 25% of IDBI Bank’s retail fixed deposits are from senior citizens, industry sources said.

IDBI Bank has also increased deposit rates for other compartments.

As of Monday, the lender is offering a maximum rate of 5.8% for retail term deposits of less than Rs 2 crore. This is for those with maturities of five years, over five years to seven years and over seven years to 10 years, the lender’s website showed.

The highest rate for seniors is 6.55% for tenors ranging from 5 years to more than 5 years and up to 10 years.

Effective August 20, Unity Small Finance Bank also raised rates on pooled deposits. For non-refundable bulk deposits worth more than Rs 2 crore but less than Rs 5 crore, the bank offers a maximum rate of 7.1%. These are tenors over two-three years old and over three-five years old.

Last week, State Bank of India (SBI) and Bank of Baroda also announced special deposit schemes to commemorate 75 years of independence. SBI launched a 75-day program, offering 6.1% for fixed deposits, with seniors being offered 0.5% more.

Since the Reserve Bank of India’s (RBI) decision to raise the repo rate by 50 basis points (bps) on August 5, a large number of lenders have raised fixed deposit rates at various maturities. These include Indian Overseas Bank, Indian Bank, Kotak Mahindra Bank and Ujjivan Small Finance Bank.

As of July 29, bank credit growth was 14.5% year-on-year (YoY). For deposits, it stood at 9.1%, according to the latest RBI data.


Higher loan rates

Mortgage financier LIC Housing Finance has raised its home lending rates by 50 basis points, effective August 22. New rates on home loans would now start at 8% from 7.5% previously.

“The rise in the repo rate has caused minimal fluctuation in EMIs or mortgage tenors, but housing demand will remain robust. The rise in LIC HF interest rates is in line with the market scenario,” said Y Viswanatha Gowd, Managing Director (MD) and Managing Director (CEO), LIC Housing Finance.

Bajaj Housing Finance also raised its home loan rates by 50 basis points on Monday. Rates start from 7.7%. “While interest rates have risen by 50 basis points, the company’s home loan offering remains one of the most competitive in the market,” he said.

Previously, HDFC raised mortgage rates by 25 basis points. Revised rates for new borrowers would be between 8.05% and 8.55%, depending on the amount of the loan.

IndusInd Bank also raised its marginal cost of funds-based lending rate (MCLR) by 10 to 20 basis points across all tenors, effective August 22.

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