The largest bank of the country, State Bank of India (SBI), has increased interest rate on fixed deposit below Rs 1 crore by up to 25 basis point in select tenures. One basis point is one-hundredth of a percentage point. For fixed deposits with a maturity of one year to less than two years the FD rate has been raised to 6.65 per cent from the earlier rate 6.4 per cent. The interest rate for senior citizens has also been, accordingly, increased to 7.15 per cent from the previous rate of 6.9 per cent.
For the tenure of more than two years and less than three years the interest rate is 6.65 per cent, 0.5 per cent higher than the previous rate of 6.6 per cent. The rate for senior citizens has been increased to 7.15 per cent from 7.10 per cent earlier. The interest rate remains unchanged for other maturities.
The bank has hiked rates in order to attract people to invest in fixed deposits when the benefits of demonetisation are fading away. With advances growing faster than deposits, banks are feeling need to grow their deposits, too, by giving attractive interest rate on fixed deposit.
Last month HDFC HDFC Bank also hiked interest rates on fixed deposits by upto 1 per cent. It offers 7 per cent interest rate on all deposits of more than 1 year and 17 days to 5 years. For deposits between Rs 1 crore and Rs 5 crore, called bulk deposits, the interest rate will be 7.25 per cent from the earlier rate of 7.10 per cent for a tenure of 1 year 5 days to 3 years. The rates will be 50 basis points higher for senior citizens.