Within a week of Reserve Bank of India (RBI) raising its repo rates for the third consecutive time, several banks have raised their fixed deposit (FDs) interest rates. The latest entry to the bandwagon is Yes Bank which has raised its interest rates with effect from August 10 onwards.
The private lender will now offer 6.25 percent to its term deposit holders of one year to 18 month tenor starting Wednesday.
The rate increases to 6.75 percent for fixed deposits of tenor between 18 months to 3 years. The long duration deposits ranging between 3 years to 10 years will also generate an interest rate of 6.75 percent.
The short duration fixed deposits offer rates at a lower rate i.e., between 3.25 percent to 5.75 percent.
The ultra-short-term deposits of tenor between three months to six months will now offer interest rate of 4.75 percent. The slightly longer duration FDs i.e., of six months to nine months will offer interest rate of 5.5 percent, and 5.75 percent for the FDs of nine months to one year.
Ever since the Reserve Bank of India (RBI) raised repo rates by 90 basis points in a span of two months (May and June), commercial lenders have been raising interest rates on term deposits, as well as on saving bank accounts, one after the other.
The banking regulator raised its short term borrowing rate (repo rate) on May 4 by 40 basis points (bps) to 4.40 per cent. This was followed by a 50-basis point rate hike on June 8. And now, the latest rate hike on August 5 of 50 bps raised the policy rate to 5.4 percent.
Other banks that have raised their fixed deposit interest rates after the latest repo rate hike include Indian Bank, Bank of Baroda, Indian Overseas Bank.
Prior to that, Kotak Mahindra raised its interest rates on fixed deposits with effect from July 26. Before that, Kotak Mahindra Bank raised its rates in the first week of July.
In July itself, Kotak Mahindra and Punjab National Bank raised their interest rates, HDFC Bank raised its rates in June. South Indian Bank raised rates in April followed by Bajaj Finance Bank.