BoB hikes deposit rates; announces plan to raise Rs2,000 crore

Mumbai: Bank of Baroda (BoB) has announced a 25-50 basis point increase in interest rates on term deposits of various maturities. The public sector lender said it would also raise Rs2,000 crore by February next year to meet the Basel II capital adequacy norms and credit requirements.  

"We have revised deposit rates effective today by up to 50 basis points on various maturities,'''' A K Khandelwal, chairman and managing director of the bank, said. The interest rate for deposits with a maturity of 91-180 days has been increased to 6.25 per cent from 6 per cent. For deposits with maturity between 180 day and one year, rates have been increased to 7.25 per cent, he said. One year-to-two year deposits would now attract 8.5 per cent as compared to 8.25 per cent previously.

The bank, however, discontinued its one-year deposit scheme that attracted interest at 9 per cent.

"We plan to raise around Rs2,000 crore through Tier II bonds by February next year, Mr Khandelwal said. Bank of Baroda has a capital adequacy ratio of around 12.9 per cent now but it needs additional capital under Basel II norms since the bank has got international operations.

Khandelwal said the bank expects to achieve 22-24 per cent growth in advances, while deposits would grow by around 20 per cent this fiscal.