Second largest private sector lender in the country, HDFC Bank has announced hike in fixed deposit rates. In a surprising move from the bank the deposit rates have been increased by 50-100 basis points across various maturity periods.
An analyst at domestic brokerage firm, IIFL, Mr. Rajiv Mehta said, "This is really an incredible move by the bank as the system itself is close to the peak of deposit rate hikes. It appears as though the credit demand for this particular bank is very high. This may be followed by a hike in lending rates by at least 50 bps."
The Chief Financial Officer at IDBI Bank, Mr. P. Sitaram said, "Banks will need to be careful before raising deposit rates as in the current situation credit demand is not that robust. Therefore, banks may find it difficult to pass on the increased costs to the lending side."
General Manager-retail at Central Bank of India, P. V. Raveendran said, "We are as of now finding it difficult to deploy our existing funds profitably. Currently, the idea of raising deposit rates further is ruled out. Our net interest margins are as it is getting squeezed in the current rates offered."
The revised rates are applicable from 2nd February.