Amid tight liquidity, the country's largest public and private sector banks announced an increase in deposit rates.
State Bank of India (SBI) Chairman O P Bhatt said the bank might raise deposit rates next week, at least by 50 basis points. However, he ruled out any increase in the base rate or the benchmark prime lending rate in December.
He said while credit growth had picked up, more deposits could be attracted by offering better rates.
"We have seen a slight improvement in credit growth, not much though. Hopefully, it will pick up further. So, 19 per cent year-on-year growth may be possible.
The deposit growth is much less. But as credit growth picks up, deposits can be attracted by better pricing, which is beginning to happen," Bhatt said.
"In the current scenario, the deposit rates can only go up," he added.
Sensing competition for raising resources, ICICI Bank also raised the interest rate on retail term deposits by 25-50 basis points across various tenors. The last revision in deposit rates was in October.
ICICI Bank also raised its lending rate by 50 basis points, increasing the repayment burden on customers, including home loan borrowers. The new rates will be effective from December 6.
The revised floating reference rate (FRR) for consumer loans will go up by 50 bps to 13.75 per cent.
Similarly, its revised prime lending rate (PLR) will be 16.75 per cent, up from 16.25 per cent.
These benchmark rates are used for determining interest rates on loans and advances sanctioned up to June 30. The last revision in FRR and PLR was in August 2010. The quantum of rise in both cases was 50 basis points.
ICICI's outstanding loans at the end of September 2010 were Rs 1,94,200 crore (Rs 1,942 billion). The retail loan book was Rs 78,100 crore (Rs 781 billion).
Home loans form 65 per cent of total retail loans. HDFC, the private mortgage lender, has raised its retail prime lending rate by 75 basis points from December 1.
In October 2010, ICICI revised its base rate (I-Base) by 25 basis points to 7.75 per cent. This time, it has not raised the base rate.
