IDBI Bank hikes deposit rates by 25 bps

State-run IDBI Bank today hiked the deposit rates by 0.25 per cent, becoming the first bank to do so after the Reserve Bank of India's recent Cash Reserve Ratio (CRR) hike by 0.75 per cent to 5.75 per cent.

The lender increased the rates across select maturities effective from February 15.

Other banks are also likely to take a cue from the bank and may follow the suit in the coming days.

"The decision to hike the rate is partly owing to the recent hike in the cash reserve ratio last month," a senior IDBI Bank official told PTI.

Though bankers had ruled out any immediate impact on interest rates owing to the RBI action, they said that rates were likely to rise in the period ahead as credit growth picks up and liquidity dries up from the system.

With this, rate on six months to 1 year deposit will now be at 6 per cent (5.75 per cent) while that of one year to less than 500-days has been hiked to 6.75 per cent (6.5 per cent).

Similarly, 500-days to 2 years and 2-years to less than 1,100 days maturity deposits will now attract rates of 6.75 per cent (6.5 per cent) and 7.25 per cent (7 per cent) respectively, the bank said.

Announcing the rate revision, IDBI Bank said it will pay an additional interest of 0.5 per cent to senior citizens above the normal interest rate. But will charge one per cent penalty on premature withdrawal of deposits.