For retail deposits, below Rs 1 crore, rates have been increased by up to 0.50 percent, while for deposits maturing in one year to less than two years, the pricing has been raised by 0.15 percent to 6.40 percent from 6.25 percent earlier. For retail deposits below Rs 1 cr, SBI increased fixed deposit rates by up to 0.50%, while for deposits maturing in one-year to less than two years, the pricing has been raised by 0.15% to 6.40%.
Following SBI, ICICI too raised its overnight MCLR by 15bps and one-year MCLR by 10bps, while Punjab National Bank (PNB) hiked its one-year MCLR by 15bps.
Banks are raising interest rates even though the central bank is leaving the repo rate unchanged.
The other side of the store rate hike is that it will push up the rate of assets for the bank.
For one year deposits, the PNB will offer 6.75% compared to 6.5% earlier.
OvernightMCLR and six-month MCLR have been increased by 10 bps each to 7.80% and 8%, respectively.
The new benchmark rate will be effective from March 1, 2018, the bank said through a notification.
The lending rate hike also comes in the wake of banks as a whole seeing pick-up in credit demand.
On Wednesday, SBI hiked its retail and wholesale deposit rates by 10 to 50 basis points (bps) across various maturity baskets.
The lender also increased its retail and bulk term deposits by up to 45 basis points. "However, other majors may follow the trend and increase deposit rates, but it will also depend on their liquidity situation", said Pritesh Bumb, an analyst at Prabhudas Lilladher Pvt. Ltd. The bulk deposits for one year maturity has been increased to 6.75 per cent from 6.50 per cent. In its February 7, 2017 review, the Monetary Policy Committee (MPC) of the RBI had said that the economy is on a recovery path, including early signs of a revival of investment activity.