Deposits rise by Rs 1 lakh cr in fortnight ended April 8

Banks’ deposit growth accelerated to 17 per cent year-on-year in the fortnight ended April 8, as depositors expected deposit rates to have peaked and felt there would be no further rate rise in the near term.

According to data provided by the Reserve Bank of India , banks’ deposit base grew by Rs 1.2 lakh crore in the fortnight ended April 8, 2011, the highest growth recorded in a fortnight since December 31, 2010. Analysts say banks usually resort to shoring up in the last few days of the quarter in order to meet their growth targets.

“A substantial amount of this came from bulk deposits and will not stay for long in the system,” said a banking analyst with a domestic brokerage. Banks were offering bulk deposits at more than 10 per cent in the last few days of the March quarter. After March 31, most banks stopped taking bulk deposits above card rates. Oriental Bank of Commerce and Punjab & Sind Bank cut card rates on bulk deposits this month.

 

In terms of retail deposits, banks like Bank of Baroda and Dena Bank withdrew the special deposit schemes but did not make any changes in the term deposit interest rates. So far, only Central Bank of India had reduced interest rates on retail term deposits by 25-100 basis points.