Bank of India floats 666 days term deposits bucket with 7.3% rate

Slashes rate on 2-year deposits by 45 basis points

With competition for garnering deposits becoming intense, public sector lender Bank of India (BOI) has floated a new retail term deposits bucket of 666 days carrying a 7.3 per cent annual interest rate.

This move by BOI comes close on the heels of the State Bank of India (SBI) decision to hike the interest rate on retail term deposits by 25-75 basis points for deposits up to one year.

At the same time, BOI, the Mumbai-based lender, slashed the interest rate on retail deposits of 2-year maturity from 7.25 per cent to 6.80 per cent. The revised rate will come into effect from June 1, 2024. There is no change in the interest rate for other maturity buckets, BOI officials said.

Giving the rationale for the new bucket, bank officials said banks are scurrying for resources, given the pressure on liquidity and customers moving money to avenues like mutual funds offering better returns. Most deposits with banks are in maturity buckets up to two years. Hence, there is a need to retain existing funds and attract new funds in deposit brackets. The revision in the two-year deposit category was also driven by the same thinking, they added.

Its deposits rose by 10.21 per cent year-on-year to Rs 7.37 trillion at the end of March 2024. The share of retail deposits declined from 45.66 per cent in March 2023 to 44.25 per cent in March 2024. Also, the share of low-cost deposits - Current Account and Savings Accounts (CASA) declined from 44.73 per cent in March 2023 to 43.21 per cent in March 2024.