Union Bank hikes deposit rates by up to 0.50%

Public sector lender Union Bank of India today announced hiking deposit rates by up to 0.50 per cent across various maturities with effect from April 5.

The rate hike, which has come only a few days ahead of the Reserve Bank's annual monetary policy scheduled for April 20, makes retail deposits above one year tenure and up to Rs 1 crore more attractive for the bank's customers.

With this, retail deposits of one year will now attract a rate of 6.5 per cent per annum against the earlier 6 per cent.

For deposits of tenure 2 years, 3 years and 5 years, rates offered are 7 per cent, 7.25 per cent and 7.50 per cent respectively. The new rates are up by 0.25 per cent over the currently-offered rates, the bank said.

Banking analysts said that this move in all likelihood would prompt other banks to announce a hike in their deposit rates with a view to protect their margins.

The Reserve Bank, which started exiting its monetary stimulus in January by hiking cash reserve ratio (mandatory deposits of banks with RBI) by 0.75 per cent to 5.75 per cent, is widely expected to tighten its policy stance further this month.