OBC, Allahabad Bank raise fixed deposit rates

Two public sector lenders Oriental Bank of Commerce (OBC) and Allahabad Bank today raised fixed deposits rates by up to 30 basis points (bps) on select maturities.

The move come two day ahead of the mid-quarterly review of the monetary policy.

Term deposit rate for maturities between 1-2 years has been raised from 9.60% to 9.75%, OBC said.

At the same time, another public sector lender Allahabad Bank increased interest rate on term deposits of between 91 and 179 days by 30 basis points to 7.30%.

Interest rates on other maturities would remain unchanged.

The Reserve Bank of India (RBI) is scheduled to announce mid-quarterly review of monetary policy on September 16. It is expected that the central bank will raise key policy rate further to tame inflation.

Banks are of the view that if RBI raises rates, they will pass on to customers.

In July, the RBI raised the short-term lending (repo) rate by 50 basis points to 8% and the short-term borrowing (reverse repo) rate by a same margin to 7% in a bid to tame inflation.

Subsequently, the interest rate under the Marginal Standing Facility, an additional borrowing window, has gone up to 9% from the earlier level of 8.5%.