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As banks’ chase to get cheap deposits for customers has not been fruitful, they are now forced to offer inflation-beating real interest rates on fixed deposits, and state-run banks led by Punjab & Sind Bank 8- The ones offering 8.50% top the charts. Annual Deposit Rate.
Banks are forced to offer deposit rates that beat inflation for tenors ranging from 200 to 800 days, as credit growth has far outpaced deposit mobilization throughout the financial year, leading to a funding shortfall Is.
Read also: Heavy hike in post office savings bank interest rates
Even at the lowest 7%, fixed deposit pricing is a positive for customers as real rates are in the green, even after a surprise rise in retail inflation for January to 6.52%.
Inflation has remained above 6% for 10 months of 2022, forcing the Reserve Bank to hike rates by 250 bps to 6.50% through six consecutive hikes starting May 2022.
In the fortnight to January 13, 2023, credit growth accelerated to 16.5% annualized as against 10.6% growth in deposits. In fact, for almost the entire year, deposit growth has been in the mid-single digits and the recent increase has been due to the increase in deposit rates since December.
Rates are better from other angles as well, as one-year post office deposits for two years fetch 6.6% and 6.8%, while 10-year government securities yield just 7.35%.
The higher rate offer also comes as banks have almost entirely passed on the RBI’s 250-bps rate hike since May last year to their borrowers, not doing the same for deposits, leading to a funding gap. and they are being forced to borrow. Market.
As per the new deposit pricing, any depositor of a public sector bank is assured an average of 7 to 7.25% for fixed deposits for tenures ranging from 200 days to 800 days.
Country’s largest lender State Bank of India, which has the largest retail franchise with around 20,000 branches, is offering 7.10% for general public and 7.60% for senior citizens on an annualized basis for fixed deposits in buckets of 400 days .
Punjab and Sind Bank is offering the highest 8% to retail depositors and 8.50% to senior citizens for a bucket of 221 days.
Central Bank of India gives the second best rate for 444 days to senior citizens at 7.85% and retail at 7.35% while Union Bank of India offers its 800 days deposit at 7.30% and 7.80 for retail and senior citizens Pricing at %.
Punjab National Bank is offering 7.25% and 7.75% to retail and senior citizens respectively on its 666 days bucket, Bank of Baroda’s new rates are 7.05% and 7.755% for 399 days; Bank of India is offering the same rate as Bank of Baroda for 444 days, while Bank of Maharashtra’s new rate is 7% and 7.50% for 200 days.
For 400 days, Canara Bank is offering 7.15% and 7.65%; Indian Bank is paying 7% and 7.50% for its 555 days deposits; UCO Bank came at 7.15% and 7.25% for 666 days; And Indian Overseas Bank is offering 7% and 7.50% for 444 days.
On the other hand, the largest private sector lender HDFC Bank offers only 7% to the general public and 7.50% to senior citizen depositors for five years, while its immediate peer ICICI Bank offers 7.5% for retail and 7.5% for more than 15 months. gives 7% for For senior citizens for more than 15 months.