Bandhan Bank offers 7.5% interest rate on retail FDs for limited period

Rate applicable to both fresh deposits and renewals of up to Rs 2 crore for a tenure of 600 days, seniors to get 0.5% more

Kolkata-based private sector lender Bandhan Bank on Monday said it has launched a limited period fixed deposit scheme, offering one of the highest interest rates in the banking sector. The bank is offering an interest rate of 7.5 per cent on retail deposits of up to Rs 2 crore for a tenure of 600 days, effective from November 7.

Senior citizens will get 50 basis points more on FDs this scheme, taking their returns to 8 per cent for a 600-day tenure fixed deposit of up to Rs 2 crore.

This will be applicable to fresh deposits as well as renewals of maturing deposits.

Other medium sized banks such as RBL Bank and IndusInd Bank are offering peak interest of 7.25 per cent and 7 per cent respectively. Even IDFC First Bank is offering the highest interest of 7.25 per cent.  

Top tier banks such as State Bank of India, HDFC Bank, and ICICI Bank are offering highest interest rate in the range of 6.25 per cent to 6.50 per cent. 

With liquidity in the system tightening, and credit demand reaching multi-year highs, banks have now become aggressive in their deposit rate increase to garner durable liquidity to support the credit demand in the economy. Major public sector and private sector banks revised their deposit rates upwards last month and are currently engaged in a fierce competition to raise deposits.

Given that 45 per cent of bank deposits are CASA, it is only the 55 per cent of term deposits that need adjustment and hence ideally, a 190-basis point increase in repo rate could result in 105 basis point increase in deposit rate.

On a system level, while credit growth is at a nine-year high of 17.9 per cent, deposit growth at 9.5 per cent is trailing credit growth by a substantial margin. With the high credit absorption and resources growing at a lower pace, banks are quoting higher rates for bulk deposits and also mobilizing through Certificates of Deposit (CD) market at a higher rate.