It’s Celebration, as interest rate inches to 10%
Depositors pleased all the way to the bank and literally so, as interest rates offered by banks on deposits reached nearly 10 %. There are many public sector banks (PSU banks) now offers 9.75 % interest, and private peers have already raised interest rates beyond 10 %.
As the strongest interest rates increasing by about 200 basis points, came less than a year, investors have been busy re-pricing “(a term that refers to a bank pre-close an existing framework for a more open Fast new) to their portfolios. Faced with the threat of capital flight to the other, banks are forced to offer higher interest rates for each rate hike The RBI has started. Yet, the party is not over, as soon as the RBI would need to raise interest rates again.
Given that the stock market is in turmoil continues and mutual funds just to generate positive returns, the bank fixed deposit (FD) is the flavor of the day for the risk averse investors. Not surprisingly, the deposit growth in recent years has exceeded the credit growth due to soaring interest rates on deposits.
Private banks offer more:
According to latest RBI data, the first two weeks in July 2011 and bank loans rose by Rs 85 833 crore in the previous period, while deposits grew by Rs 1,45,951 crore. More than a dozen institutions in the private sector, cooperative banks, which offer the FD rate for people from 10.20 to 10.50 % for each year of tenure 1-2 years.
Higher rates offered by private banks may be attractive, but then you will have to deal with uncertainty until the deposit matures. But for holders of small deposits (up to Rs one lakh), there is a protection in the form of mandatory coverage of deposit insurance administered by the state and Credit Guarantee Corporation (DICGC). For those not willing to take the risk, check both banks and PSU banks in the private sector provide safe bet with yields up to 9.75 %. For example, the State Bank of Mysore State Bank of Patiala offers 9.75 annual interest on short-term (1-2 years) where the State Bank of Travancore offers 9.60 %, while Union Bank Bank and Punjab & Mind (both) offers 9.55 %.
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Among private players, Lakshmi Vilas Bank offers 10.50 %, Syriac Catholic Bank Karur Vysya Bank and 10.25 % and 10 %, respectively, for the tenure of 1-2 years. National Bank offers 9.8 %, while the south of India and the Development Credit Bank both offer 9.75 %. Of course, there are some cooperative banks as Tamilnadu Mercantile Bank, Shamrao Vithal Cooperative and the Maharashtra State Cooperative Bank offers interest between 10.20 and 10.35 %.
“For now, deposit growth is very important for banks and credit deposit ratio is already high, and move on, banks need a strong deposit base, if they want to pay,” said Fortune Financial Research Analyst Hatim Brochwala
Source: [deccanherald]
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