A race is on to woo depositors. At least seven banks have in recent days either increased the rates or launched new schemes offering attractive returns on deposits.
On Tuesday, State Bank of India joined the list and upped retail term deposit rates. Deposits below Rs.15 lakh, for a tenor of 7-90 days, will now earn an interest of 8 per cent as against 7 per cent; those for 91-179 days 8 per cent (7.25 per cent); 181-240 days 8 per cent (7 per cent); and for 241 days to less than a year 8 per cent (7.75 per cent).
The bank has also decided to increase the rate by two percentage points to 9 per cent for deposits above Rs.15 lakh for 180 days. Single deposits above Rs.15 lakh for a tenor of 7-90 days would be eligible for an additional one percentage point over the card rate of 8 per cent. There will no penalty on premature withdrawal on deposits of up to 180 days if the deposits have remained for over seven days, an official said.
The SBI move comes even as the government, on Monday, hiked the rates of interest on post office small savings plans by up to 50 basis points for 2012-13.
The objective is to make them attractive and stop retail investors from migrating to term deposits of banks.
However, it would be challenging for the postal savings schemes as many banks, from the beginning of this month, have revised their deposit rates.
Indian Bank unveiled ‘Indian Bonanza', a limited period offer from March 1-31. The deposit is for a period of 91 days and offers an interest rate of 9.10 per cent on deposits up to Rs.5 crore.
Allahabad Bank is offering a special domestic term deposit scheme, whose validity ends this month, under which the rate on deposits of Rs.5 crore and above for a maturity period ranging from 15 days to 120 days is 9.25 per cent.
Admitting that short-term deposits are relatively cheap, an official of Indian Bank said banks also stood to increase their customer base by offering such attractive deposit rates. Irrespective of the objective, it appears to be a bonanza unfolding for the customers.
