ICICI hikes deposit rates by up to 0.5 percentage points

The country's largest private sector lender ICICI Bank yesterday said in a statement that it is raising the deposit rates by up to half-a-percentage point across different maturities.

The bank has, with immediate effect, raised interest rate for deposits having 390-day maturity to 6.75 per cent from 6.5 per cent earlier.

Meanwhile, deposits having 590-day maturity will now get an interest rate of 6.75 per cent against the earlier rate of 6.25 per cent.

Last month, the Reserve Bank of India hiked its cash reserve ratio (CRR) by 75 basis points, which is expected to absorb about Rs36,000 crore from the system (See: RBI raises CRR by 75 basis points to 5.75 per cent)

CRR is the amount banks need to keep with the central bank.
The central bank has, however, left the short-term lending and borrowing rates between RBI and banks unchanged, which has triggered speculation that banks' commercial lending rates may not change.

Consequently, HDFC Bank had hiked its deposit rates last week by up to 150 basis points for select maturities.

IDBI Bank had also increased its deposit rates by 25 basis points in some tenures.
Analysts, however, said that State Bank of India, India's largest lender with a market capitalisation of around $26.3 billion, will not increase its rates immediately as the bank is flush with funds.

Moreover, SBI chairman O P Bhatt on Wednesday said the bank will raise up to Rs20,000 crore through a rights equity issue in the coming financial year (2010-11) to finance part of its credit growth, (See: SBI plans Rs20,000-crore rights issue to finance credit growth).