HDFC, Bajaj Finance hike rates on long term deposits ahead of RBI meet

In a move that could bring some respite to savers, two of the largest non-banking lenders, HDFC Ltd and Bajaj Finance, have hiked their long-term deposit rates ahead of the Reserve Bank of India’s (RBI) monetary policy meeting, in a sign that the rate cycle may be turning.

India’s largest mortgage lender, HDFC Ltd, hiked its long-term rates by upto 15 basis points (bps). It is now offering an annual return of 6.25 per cent on a 33-month deposit of upto Rs 2 crore. Similarly, a deposit of Rs 2 crore will fetch an annual return of 6.7 per cent for a period of 66 months, and 6.8 per cent for a period of 99 months. These rates are effective immediately i.e., December 1. Senior citizens (60 years+) will be eligible for an additional 0.25 per cent per anum on deposits upto Rs 2 crore, other than recurring deposits.

On the other hand, India’s largest consumer financier, Bajaj Finance, has hiked interest rates by upto 30 basis points on long term deposits for a period of 24 – 35 months and 36 – 60 months. There is no change in the annual returns for the period 12 – 23 months. According to the revised returns, the consumer financier is offering 6.4 per cent on a deposit of upto Rs 5 crore for a period of 24 – 35 months and 6.8 per cent for a period of 36 – 60 months.

With the benchmark rates at their lowest level because of the Coronavirus (Covid-19) pandemic, savers have had to bear the brunt of low returns on their deposit so much so that many have moved away from fixed deposit to investing in systematic investment plans of mutual funds and guaranteed return products of insurance companies.

RBI’s repo rate currently stands at 4 per cent. With the ultra-loose monetary policy coming to an end, the rate cycle may turn sooner rather than later and this would mean the borrowing cost for many would rise.