HDFC Bank, Axis Bank raise fixed deposit rates by up to 4%

HDFC Bank, Axis Bank raise fixed deposit rates by up to 4% New Delhi: Faced with a tight liquidity condition, two leading private sector banks -- HDFC Bank and Axis Bank -- have raised fixed deposit rates by up to 4 percent, a move which may be followed by others.

Country's second largest private sector lender HDFC Bank has raised fixed deposit rates by 1 percent for maturities between 15 days to 6 months one day effective July 27, as per information available on its website.

The bank has increased the interest rate by 0.75 percent for maturity buckets less than 1 year but over 6 months one day.

Axis Bank has raised interest rate on term deposits with maturity between 14-29 days by 4 percent to 8 percent, while in case of 7-14 days the increase is by 3.5 percent to 7.5 percent on bulk deposits above Rs 1 crore, effective today.

At the same time, the bank raised interest rate by 0.5 to 2.25 percent across the various maturities less than one year but over 29 days, as per Axis Bank website.

Yesterday, private sector Yes Bank had raised lending and deposit rates by up to 0.5 percent.

The bank revised upwards its base rate, or minimum lending rate, by 0.25 percent 10.75 percent.
The bank also revised its fixed deposit rates by 0.25 percent to 0.5 percent in select tenors.

In order to contain rupee depreciation, RBI has taken slew of measures in the past couple of weeks resulting in the tight liquidity situation for the banks.

The decline of the rupee to a record low of 61.21 against the dollar on July 8 forced the RBI to take a series of unconventional measures to curtail liquidity and curb speculation.

On July 15, the Reserve Bank put in place measures to restore stability in the foreign exchange market, including raising the Marginal Standing Facility and bank rates to 10.25 percent and restricting access by way of repo window to Rs 75,000 crore.

The central bank also conducted open market sales of government securities of Rs 2,500 crore on July 18, the RBI review said.

As a contingency measure, the central bank opened a dedicated special repo window for a notified amount of Rs 25,000 crore for liquidity support to mutual funds that face redemption pressure.

On July 22, the RBI rationalised import of gold by making it incumbent on all nominated banks to ensure that at least one-fifth of the imported metal is exclusively made available for the purpose of exports.

A day later, the RBI directed banks to draw only 50 percent of their total deposits in overnight borrowings and maintain a 99 percent average cash reserve ratio every day.

PTI