Bob, Syndicate, Oriental Hike Deposit Rates

In a clear indication of spurt in short term interest rates, Syndicate Bank and Bank of Baroda have raised their deposit rates by 50 basis points for short term deposits. BoB has also raised it non resident non repatriable (NRNR) deposit rates by 100 basis points to 12 per cent for the slab of two to three years. The hike in NRNR rates follows the Reserve Bank of India's decision on December 2 to remove the cash reserve ratio on NRI deposits.

"The market is expecting interest rates to firm up for short terms. Leading financial institutions, which make large investment for 91 days to 179 days, also prefers to take a short term view over the interest rate movement," says K Kannan, chairman and managing director, BoB.

 

"Thus, in order to maintain the deposits of large depositors who believe that rates will firm up, we have decided to raise our rates," he added. Both banks have raised interest rate from 6 per cent to 6.5 per cent for 46 days to 90 days.

Oriental Bank of Commerce has also raised short term deposit rates with effect from January 15. Interest for deposits made for 30 days to 90 days, has been increased from 5 per cent to 5.5 per cent. The bank has also raised interest on deposits over three years to 11.5 per cent from 11 per cent.

The rates for periods ranging from 6 months to three years remain unchanged, the bank said in a statement.

both the banks will now offer 8 per cent against the previous offer of 7.5 per cent. While Syndicate Bank has decided to raise rates for over 3 years from 11 per cent to 11.5 per cent, Bank of Baroda will continue to offer 11 per cent.

The other rates for the slab of 30 to 45 days, over one year to two year and over two years to three years remain unchanged at 5.5 per cent, 10 per cent and 10.5 per cent respectively. The revised rates will come into effect from January 15, 1998.

Meanwhile, officials of State Bank of India have said that the bank is not considering a hike in deposit rates.