Hindustan Unilever employee Sachin Shah, 28, has invested Rs 5 lakh in FDs in the last five months. The new deposits will earn around 9.5 per cent since he has opted for a one-two year term, compared to 8.25-8.75 per cent he will earn on the Rs 8 lakh he had deposited earlier.

On an annualised basis, the Rs 5 lakh deposit will earn him around Rs 50,000, compared with Rs 42,000 he would have earned till April.

While the central bank's monetary tightening through increase in repo rates, or the rate at which it lends, and cash reserve ratio, or the proportion of deposits that banks have to set aside, has seen lending rates increase by up to 100 basis points, many banks have not increased deposit rates by the same magnitude.

For instance, State Bank of India [Get Quote] had raised its prime lending rate by 100 basis points, but increased deposit rates only by 25-75 basis points.

Many, including Axis Bank, Bank of Baroda [Get Quote], Union Bank of India [Get Quote] and mortgage player HDFC [Get Quote], have left deposit rates unchanged to ensure better net interest margin. These banks have, however, not ruled out an increase.

"Deposit rates are market-driven and more dynamic. We can change it later as well," said a bank chief.

Partho Mukherjee, Axis Bank's treasury head, said, "To be in competition, banks need to keep a close watch on deposit rates. Our assets and liability committee (Alco) will first see the impact of the recent rise in deposit rates by other banks. Before a further upward revision in interest rates on our FDs, we will assess the reaction of investors."

For depositors, however, the volatility in the stock markets is making FDs more attractive.

"I stopped investing in equities after January when the markets started falling. Moreover, FDs are very attractive. Now, I invest 40-50 per cent of my savings in FDs, and mostly in maturities of 15 months, because the best interest rates are offered on these tenures," said Shah.