Mumbai: As banks' chase for customers to collect cheap deposits is not fructifying, they are forced to offer inflation-beating real interest rates on fixed deposits now, and state-run banks led by Punjab & Sind Bank tops the chart offering 8-8.5 percent per annum deposit rate. Banks are forced to offer inflation-beating deposit rates for a tenor ranging from 200 to 800 days as credit growth has been far outpacing deposit mobilisation throughout this fiscal, leading to a funding crunch.
Even at the lowest seven percent, fixed deposit pricing is positive for customers after a surprise spurt in retail inflation for January at 6.52 percent, the real rates are in the green.
The high rate offering also comes as banks have almost fully passed on the 250-bps hike in RBI rate since May last year to their borrowers, they've not been doing so for deposits, leading to a funding gap and forcing them to borrow from the market. According to the new deposit pricing, on average any depositor of a public sector bank is assured of 7 to 7.25 percent for fixed deposits for a tenor ranging from 200 days to 800 days.
State Bank of India, which has the largest retail franchise with around 20,000 branches, is offering 7.1 percent for the general public and a higher 7.6 percent to senior citizens on an annualised basis for fixed deposits in the 400 days bucket. Punjab & Sind Bank is offering the highest at eight percent to retail depositors and 8.5 percent to senior citizens for the 221-day bucket.
The Central Bank of India gives the second-best rate at 7.85 per cent to senior citizens for 444 days and 7.35 percent to retail, while Union Bank of India is pricing its 800 days deposits at 7.3 percent and 7.8 percent for retail and senior citizens. Punjab National Bank is offering retail and senior citizens, respectively, at 7.25 percent and 7.75 percent on its 666 days bucket, Bank of Baroda's new pricing comes at 7.05 percent and 7.75 percent for 399 days, Bank of India is offering the same rate as that of Bank of Baroda for 444 days, while Bank of Maharashtra's new rate is seven percent and 7.5 percent for 200 days.
For 400 days, Canara Bank is offering 7.15 percent and 7.65 percent, Indian Bank is paying 7 percent and 7.5 percent for its 555 days deposits, UCO Bank comes at 7.15 percent and 7.25 percent for 666 days, and Indian Overseas Bank is offering 7 percent and 7.5 percent for 444 days.
On the other hand, the largest private sector lender HDFC Bank offers only 7 percent to the general public and 7.5 percent to senior citizen depositors for five years, while its immediate peer ICICI Bank gives 7 percent for more than 15 months to retail and 7.5 percent to senior citizens for over 15 months.
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