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Banks increase interest rates on long term fixed deposits

It was expected that there would be a fall in the interest rates of the deposits. But contrary to the expectations, the commercial banks are now seen increasing the interest rates on the fixed deposits of two to three years.

The rate of interest on the fixed deposits of two to three years, three to five years and five years terms of Deutsche Bank has been hiked by 110 to 125 basis points. Now the revised rates of the fixed deposits are 9.25 % for the fixed deposits of two to three years, 9.5% for fixed deposits and 9.5% for five years fixed deposits.

Meanwhile the State Bank of India has also increased its interest rates in the retail deposits of three to five years by 50 basis points to 9%rate of interest per year on June 30, 2012. The Reserve Bank Of India released data which mentioned that the bank deposits mobilization has grew by 14.4 % year on year while the loans grew by 17.8 % year on year as on June 15, 2012.

Bunty Chawla a research analysts from the Shah Investor’s Home said, “The deposit growth of banks as on 18th May 2012 remains below the RBI’s expectations for FY2012-2013, while credit growth better than RBI’s expectations for FY2012-2013”. The recent hike on interest rates is to improve deposit growth.


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