New FD schemes: RBL to TMB, mid-tier banks enter the great deposit chase

Launch special schemes to boost fund base

Following the lead of major banks, several mid-tier lenders, including RBL Bank, Bank of Maharashtra, Federal Bank, and Tamilnad Mercantile Bank, have rolled out special fixed deposit schemes to drive deposit growth.

Kerala-based Federal Bank has unveiled a special fixed deposit scheme with the interest rates of 7.35 per cent for a 400-day tenor, 7.40 per cent for a 777-day tenor, and 50-month tenor for callable deposits. Senior citizens will get 0.50 per cent additional interest rate for these tenors.

Meanwhile, for non-callable deposits above Rs 1 crore, the private sector lender is offering interest rates of 7.50 per cent for 400-day tenor; 7.55 per cent for a 777-day tenor and 50 months’ tenor, with senior citizens earning 0.50 per cent more on all the categories. These rates will be available only for a limited period, the bank said.

Similarly, Mumbai-based RBL Bank has unveiled ‘Vijay Deposit Scheme’, offering 8.10 per cent interest on fixed deposits for a 500-day tenor while senior citizens will get an interest of 8.60 per cent for the same tenor.

Pune-based public sector lender Bank of Maharashtra has publicised on social media platforms that it is offering 7.25 per cent interest on fixed deposits with a 777-days tenor for a limited period.

Moreover, Tamilnad Mercantile Bank is offering 7.50 per cent interest rate on fixed deposits for 400-days tenor. For senior citizens, the Tamil Nadu based private sector lender is offering 8 per cent interest on fixed deposits for the same tenor.

Previously, large lenders including, HDFC Bank, State Bank of India, and Bank of Baroda have also launched special fixed deposit schemes to mobilise deposit at a faster pace to support credit growth in the system.

Kolkata-based Bandhan Bank has also launched a special scheme, wherein it is offering 8 per cent interest on 21-month tenor.

Additionally, it is also offering a competitive interest rate of 7.25 per cent on longer-term fixed deposits for a tenure above 1 Year 9 Months to less than five years.

Recently, banks have intensified their efforts to attract deposits following Reserve Bank of India’s (RBI) repeated warnings about the potential challenges that could arise if deposit growth continues to fall behind credit growth.

The sluggish growth in deposits has been attributed to the attractiveness of alternated avenues of investment.

RBI Governor recently highlighted that alternative investment avenues are becoming more attractive to retail customers and banks are facing challenges on the funding front with bank deposits trailing loan growth, resulting in banks resorting to short-term non-retail deposits and other instruments of liability, especially certificates of deposits, to meet the incremental credit demand.

Latest RBI data shows, banking system credit is growing at 13.7 per cent year-on-year (Y-o-Y) while deposit accretion is growing at 10.6 per cent Y-o-Y.