Private lender ICICI Bank raises senior citizen deposit rates to 7.2%

ICICI Bank has increased senior citizen retail deposit rates to 7.2% for deposits, even as policy rates soften and loan growth outpaces deposit mobilisation across the banking sector

At a time of downward interest rate trajectory, private sector lender ICICI Bank has raised the retail deposit rates for senior citizens to 7.2 per cent from 7.1 per cent, for the tenure of 2 years 1 day to less than 5 years.

 

The new rate comes into effect from Thursday.

 

ICICI Bank’s peak deposit rate for senior citizens is higher than large banks like State Bank of India and HDFC Bank. SBI’s peak rate for senior citizens is 7.05 per cent while HDFC Bank's is at 6.95 per cent.

 

ICICI’s move comes on the back of sluggish growth in deposits while credit growth is showing signs of revival. According to latest data released by the Reserve Bank of India, bank deposits were growing at 9.7 per cent year-on-year till October 31, while loan growth was 11.3 per cent.

 

The decision to increase deposit rate by the second largest private sector lender of the country comes at a time when the interest rate trajectory is downward as the RBI has cut the policy repo rate by 100 basis points (bps) since February this year. With headline retail inflation – the main yardstick of RBI for policy making – at historic low, a section of the market expects another reduction in the repo rate in the next review of the monetary policy scheduled December 3-5. However, a robust GDP growth for the July-September quarter – data for which will be released by the end of the month – could act as a deterrent for further rate reduction.