After the monetary policy review on Tuesday which saw yet another policy rate hike, private sector lender, HDFC Bank has raised deposit rates by upto 75 basis points. 1 basis point is equivalent 0.01percentage points.
It is evident that the bank and many others would soon be hiking the lending rates in home loan, auto and commercial loan segment.
The largest lender of the country, State Bank of India has also hinted that deposit rates might see a 0.25% rise in August-September. Lakshmi Vilas Bank has raised deposit rates by 0.50%.
Central Bank of India has also raised rates by 0.50%.
HDFC Bank's new deposit rates would come into effect from 30th July 2010.
The bank has raised rates of 91 days and 6 months deposits to 5.25% from 4.5%. Deposits with tenor between nine months and one year have new rates as 6.5% as against 5.75% earlier.
These heightened rates would however increase the cost of funds of banks.
"There is an upward bias on the deposit rates. (Rates should move up) by August-September by at least 0.25 per cent," SBI Chairman O P Bhatt said.
"We expect credit to be dearer ... As credit demand picks up, we expect lending and deposit rates to go up," RBI Governor D Subbarao had said after raising short-term lending (repo) and borrowing (reverse repo) rates by 0.25 and 0.50 per cent respectively.