(PTI) At a time when concerns are being raised about lenders delaying deposit rate hikes amid the overall rate increases, Yes Bank on Tuesday introduced a product where the interest earned on a term deposit is linked to the RBI's repo rate.
Till now, an external benchmark-linked rate has been popular on the lending side, but the same was not the case for deposits. The RBI has hiked rates by 0.90 per cent in two moves and is expected to do more to contain inflation.
After the rate hikes by the RBI, questions were raised about trailing deposit rate increases and the propensity among banks to hike lending rates immediately but deny benefits to the depositors.
In a statement, Yes Bank said its new offering will allow customers to enjoy dynamic returns on their fixed deposits (FDs) as the rate of interest will be linked to the prevailing repo rate.
The floating rate FDs can be availed for a tenure of 1 year to less than 3 years.
The lender's Managing Director and Chief Executive Officer Prashant Kumar said this is one of a kind product and there has been careful deliberation behind the launch aimed at enhancing its retail product offerings.
"One of the main advantages of this product is that the revision on the interest rate will happen automatically and will not require any manual intervention by the Bank or the customers," Kumar added.
The private sector lender had reported a 21 per cent growth in deposits in FY22 and made it clear that retail is its key focus going forward.
The new product came after the bank announced the appointment of Paytm's chief business officer Dheeraj Sanghi as its country head for branch banking.