Dena Bank Hikes Term Deposit Rates

Faced with tight liquidity and tough competition from foreign banks, Dena Bank and Development Credit Bank have announced a increased their term deposit rates yesterday. In fact, Dena Bank has hiked their short term deposit rates by 450 basis points from 8 per cent for 30 to 45 days to 12.5 per cent.

Dena Bank will offer 12.5 per cent for 46 to 90 days against 9 per cent it offered earlier. The deposit rates for other slabs remains unchanged at 9.5 per cent for 91 to 179 days, 10 per cent for 180 to one year, 10.5 per cent for one to two years, 11 per cent for two year to less than three years and 12 per cent for above three years.

 

This being the second round of upward revision of rates within a span of one month after the hike in bank rate signals a tight liquidity scenario in the banking sector, said market sources. However such hike deposit rates of 12.5 per cent for a short term will not be sustained for a longer period because the spread earned by the banks will come under severe pressure, added sources. Bank of Baroda has already hiked its rate by nearly 100 basis points for the short term deposits with effect from Monday.

In connection to hike in rates, Dena Bank has stated that this will send a strong signal of its urge to remain a leading player in domestic banking sector. This fresh revision effected on two maturities will provide an edge to the bank to tap fresh deposits and offer better interest rates to its customer.

Development Credit Banks will offer 11.5 per cent for 30 to 44 days, 13.5 per cent for 45 to 179 days and 13 per cent for 180 days and above. Dena Bank will offer interest rate on NRE deposits for six months and upto less than one year is 10 per cent, one year and upto less than three years is 11 per cent and three years and above is 12 per cent. For NRNR deposits for six months and upto less than one year 12 per cent and one year and upto three years 12.5 per cent.