(ET)
National banking bellwether State Bank of IndiaBSE 0.32 % raised interest rates on deposits for the first time in five years as it prepares to raise the lending game after the government strengthened it with capital investment and the trauma of bad loans eased. SBI follows private sector lender Axis Bank which raised deposit rates marginally last month in the first indication of rates hardening in the system as economic activity accelerates.
Rates for customers with deposits of more than Rs 1 crore and senior citizens would go up between 50 and 140 basis points. A basis point is 0.01 percentage point. The rates rise the sharpest for the 46 days to 210 days bucket by 140 basis points to 6.25 per cent from 4.85 per cent. Many banks are now expected to follow the leader as liquidity conditions are also turning adverse and a surge in demand for loans, while deposit growth rate remains tepid due to stiff competition from mutual funds and insurance companies.
