Kotak ups below 1-yr deposit rates by 0.25%;others to follow

A host of private and state-owned banks like Union Bank of India, Bank of India and Axis Bank are likely to up their deposit rates by 0.25-0.5 per cent in the next few days, taking a cue from the Reserve Bank's monetary action earlier this week.

Talking to PTI, senior officials of these banks said their asset liability committees will meet in the next few days to decide on the quantum of rate hike on deposits across various tenor, asserting that they are watching the market movements closely.

Meanwhile, private sector lender Kotak Mahindra Bank said it had already revised its deposit rates by 0.25 per cent earlier this week for maturities less than a year and is assessing the market trend to decide whether to hike rates further.

"We have raised deposit rates by 0.25 per cent for maturities below one year following the RBI rate action. That was the assessment that time. We are still watching the market and would take further actions if necessary," a senior Kotak Mahindra Bank Official said.
     
To fight inflation, the Reserve Bank on Tuesday hiked its overnight lending rate (repo) by 0.25 per cent to 5.75 per cent and the reverse repo, at which it absorbs deposits, by 0.5 per cent to 4.5 per cent.
    
Wholesale inflation, which stood at 10.6 per cent in June, has been hovering in double-digits since February.
    
On Wednesday, Bank of India Executive Director M Narendra said the bank is likely to increase its deposit rates by up to 0.5 per cent in the near future.
    
Axis and Union Bank officials also hinted at a similar hikes in deposit rates to attract more resources from investors.
    
Banks, which have already hiked their deposit rates this week include HDFC Bank, Lakhsmi Vilas Bank and Central Bank of India.
    
Earlier this week, State Bank Chairman O P Bhatt indicated that the bank may look at revising its deposit rates by August-September.