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Updated: July 31, 2010 19:34 IST

ICICI Bank ups deposit rates by 0.25-0.75 per cent

PTI
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MD and CEO of ICICI Bank, Chanda Kochhar. File photo
PTI
MD and CEO of ICICI Bank, Chanda Kochhar. File photo

India’s second-largest lender, ICICI Bank, hiked deposit rates across various maturities by up to 0.75 per cent with immediate effect, signalling a possible hike in lending rates as well.

“We have increased our deposit rates effective today across various maturities. The increase is more or less by 0.25 per cent. In some tenors, the hike is by 0.5—0.75 per cent,” ICICI Bank Managing Director and CEO Chanda Kochhar told reporters here.

The announcement came shortly after state—owned lender Union Bank raised deposit rates by up to 1 per cent. Union Bank also increased its benchmark lending rate by 50 basis points to 12.25 per cent.

After the Reserve Bank increased its policy rates earlier this week, Punjab National Bank yesterday was the first to raise the Benchmark Prime Lending Rate. It hiked the BPLR to 11.75 per cent, up 75 basis points.

A host of other banks, including HDFC Bank, Kotak Mahindra, Central Bank and Lakshmi Vilas Bank, have also upped their deposit rates.

There was a possibility that the lending rates of ICICI Bank could be hiked in the future, Kochhar said, but added that a decision in this regard will be taken after assessing the overall impact on the cost of funds.

“It (hike in lending rates) is quite possible,” she said.

To fight inflation, which stood at 10.6 per cent in June, the RBI, on July 27, hiked its overnight lending rate (repo) by 0.25 per cent to 5.75 per cent and the reverse repo, at which it borrows from banks, by 0.5 per cent to 4.5 per cent.

Earlier today, state—owned Union Bank of India had announced a hike in its lending and deposit rates with effect from August 4.

The bank has increased deposit rates by 0.25—1 per cent across maturities. It also upped the Benchmark Prime Lending Rates (BPLR) by 0.5 per cent to 12.25 per cent from 11.75 per cent, a release said here.

With the increase, one—year maturity deposits will now attract a rate of 6.75 per cent, from the previous 6.5 per cent.

Also, rates for short—term deposits of 91 days to less than six months and six months to less than 9 months have been increased from 3.5 per cent to 4.5 per cent and 4.5 per cent to 5 per cent respectively, the bank said.

Yesterday, private lender Kotak Mahindra Bank had raised deposit rates by 0.25—0.5 per cent across various maturities.

The bank has upped rates for all tenors by quarter percentage, except for 271 days, to less than one—year maturity, where the interest rate has been increased by 0.5 per cent.

Also, the rate for 7—14 day deposits has been upped to 3 per cent from 2 per cent to adjust it in line with the savings deposit rate.

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