Bank deposit rates set to rise sharply soon: Report
2 years, 5 months ago

Bank deposit rates set to rise sharply soon: Report

The Hindu  

Given the rising interest rate regime along with increasing credit demand, banks will be forced to sharply hike their deposit rates in coming months, a report said on July 28. While banks have been more calibrated in hiking their card rates on deposits, interest rate hike on deposits will be aggressive in the coming months as credit growth picks up further, leading to a decline in banking system liquidity, the report said without mentioning by how much level the rates may go up. "We also expect a hike in the repo rate by 60 bps by September to 5.5%, which will further push yields on various benchmark instruments like T-Bills up and hence the bank CD rates, thereby widening the spreads even more compared to bank deposit rates. Since large wholesale depositors have alternate options to park surplus funds at market determined rates, banks with a higher share of wholesale funding or rate-sensitive deposits will have to hike their deposit rates faster.

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History of this topic

Indian banks to stick with certificates of deposit after 2024 supply jumps 50%
1 week, 2 days ago

Indian banks to stick with certificates of deposit after 2024 supply jumps 50%

Live Mint  

By Dharamraj Dhutia MUMBAI, Dec 31 - Indian banks will continue to rely on certificates of deposit for meeting short-term cash needs in the next quarter amid tight liquidity conditions, after fundraising through these instruments rose 50% year-on-year in 2024. BY THE NUMBERS Banks issued CDs worth 12.23 trillion rupees in 2024 till Dec. 27, data from information provider Prime …

As Deposit Growth Slows, Banks Innovate with Alternative Funding: RBI
4 months, 2 weeks ago

As Deposit Growth Slows, Banks Innovate with Alternative Funding: RBI

News 18  

Banks are tapping alternative sources like commercial paper and certificates of deposit as deposit growth lags credit growth, RBI August Bulletin said on Monday. This increase amid deposit growth lagging credit expansion prompted banks to rely on alternative funding sources, as per the RBI article. While unveiling bi-monthly monetary policy, Reserve Bank Governor Shaktikanta Das expressed concern over household savings …

Reserve Bank raises interest rates, repayments now up more than 50pc since hikes began
1 year, 2 months ago

Reserve Bank raises interest rates, repayments now up more than 50pc since hikes began

ABC  

After keeping rates on hold for the past four meetings, the Reserve Bank has resumed hiking its cash rate target, with a quarter of a percentage point increase taking the benchmark interest rate to 4.35 per cent. Key points: At 4.35 per cent, the cash rate is at its highest level in 12 years The rate rise will add around …

Banks to see margin pressure amid hike in deposit rates: Jefferies
1 year, 3 months ago

Banks to see margin pressure amid hike in deposit rates: Jefferies

Live Mint  

With the rising interest rate environment, most Indian banks are likely to see some pressure on their net interest margins over the next two to three quarters. Since December 2021, most Indian banks have taken a 170-210 basis points hike in their term deposit rates, with larger private banks and State Bank of India taking hikes of around 170-210 bps, …

Interest rates could remain above 5pc until 2026, Bank warns
1 year, 5 months ago

Interest rates could remain above 5pc until 2026, Bank warns

The Telegraph  

A typical mortgage holder coming to the end of a fixed rate deal in the second half of this year will see monthly payments rise by around £220. Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Borrowers due to come off cheap fixes face a real payment shock.” The Bank expects house prices to fall “modestly’ in …

High bank fixed deposit (FD) interest rates may not last for long. Here is why
1 year, 6 months ago

High bank fixed deposit (FD) interest rates may not last for long. Here is why

Live Mint  

The era of rising fixed deposit rates may be drawing to a close, and the withdrawal of ₹2000 currency notes from circulation is believed to be a significant factor. Various macroeconomic indicators suggest that FD interest rates are approaching their peak in the current cycle of interest rate hikes. “If the financial sector receives an excess of liquidity during the …

Bank deposit rates: How the tide turned, in charts
1 year, 8 months ago

Bank deposit rates: How the tide turned, in charts

Live Mint  

Banks are increasingly paying more on deposits, reversing months of their trend of making loans costlier in response to repo rate hikes but slacking away on rewarding savers. Mint explains: Since May 2022, deposit rates have increased 113 basis points, compared to 100 bps for loan rates, a Mint analysis shows. This means that for every percentage point increase in …

Banks are paying savers again after many years of low rates
1 year, 8 months ago

Banks are paying savers again after many years of low rates

Associated Press  

NEW YORK — Americans are finally reaping some benefit from keeping their money in the bank. That has prompted banks to pay higher interest on traditional savings products like money market funds, certificates of deposit and regular savings accounts. In a sign of how competitive it is getting for bank deposits, electronics giant Apple Inc. unveiled a savings account that …

Banks are paying savers again after many years of low rates
1 year, 8 months ago

Banks are paying savers again after many years of low rates

The Independent  

For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails Sign up to our free breaking news emails Sign up to our free breaking news emails SIGN UP I would like to be emailed about offers, events and updates from The Independent. That has prompted banks to pay higher interest on …

Good news for bank fixed depositors! RBI hints at further FD interest rate hike
1 year, 9 months ago

Good news for bank fixed depositors! RBI hints at further FD interest rate hike

Live Mint  

The Reserve Bank of India, in its monthly bulletin released on Tuesday, said the intensifying competition among banks to expand their deposit base may force banks to increase fixed deposit rates. After 250 basis points repo rate hike by the central bank in May 2022, banks have been in a race to increase deposit rates. The central bank bulletin said …

FD rates to get more attractive? RBI’s 35 bps rate hike makes a case
2 years, 1 month ago

FD rates to get more attractive? RBI’s 35 bps rate hike makes a case

Live Mint  

Once again, depositors are in for a treat and the reason would be RBI's 35 basis points rate hike on Wednesday for December policy. However, this time, the transition of 35 basis points repo rate hike to FD rates is expected to be on a slower pace. RBI governor Shaktikanta Das in the policy meeting said, "the pace of transmission …

Banks increase EBLRs by 190 bps in tandem with RBI's repo rate hike
2 years, 1 month ago

Banks increase EBLRs by 190 bps in tandem with RBI's repo rate hike

The Hindu  

All major banks have increased their external benchmark-based lending rates by 190 basis points in tandem with the hike in the Reserve Bank's policy repo rate since May this year, though they have been slow in raising the deposit rates. The RBI's Monetary Policy Committee, which makes recommendations to the central bank regarding interest rates, is set to meet again …

Tightening liquidity may force Indian banks to compete harder for deposits
2 years, 3 months ago

Tightening liquidity may force Indian banks to compete harder for deposits

Live Mint  

Indian banks may be forced to compete harder to boost deposits amid tightening liquidity and rising credit demand ahead of the festive season, analysts warned. With excess liquidity in the banking system over the last couple of years on account of the cash infused by the RBI during the pandemic, banks chose to rely on raising funds from money markets …

Credit demand is gathering momentum; Will deposits catch up with the pace?
2 years, 4 months ago

Credit demand is gathering momentum; Will deposits catch up with the pace?

Live Mint  

As the impact of the pandemic continues to fade away, credit offtake in the financial system has been gathering momentum. According to the CMIE report, outstanding personal loans increased by 1.5 per cent in June 2022 compared to the previous month. Credit growth in the large industries segment was 3.3 per cent, compared to a 4.8 per cent contraction in …

Banks used to provide relief from inflation. Now they profit big
2 years, 5 months ago

Banks used to provide relief from inflation. Now they profit big

Live Mint  

The last time inflation burned hot, consumers could put money in the bank and watch it grow like the prices on store shelves, easing much of the pain. Many banks are telling shareholders that so-called deposit betas — measuring how quickly deposit rates rise in the wake of Fed hikes — will remain advantageous for banks in the months ahead, …

DBS Group expects Reserve Bank to cut repo rate by 25 bps at June 6 monetary policy meet
5 years, 7 months ago

DBS Group expects Reserve Bank to cut repo rate by 25 bps at June 6 monetary policy meet

Firstpost  

Markets are also keen to watch for any tweaks in the liquidity framework from the current stance of ’neutral’ to ‘surplus’, DBS said Singapore: Singapore-based DBS Group expects the Reserve Bank of India’s rate-setting panel to make a 25-bp cut in the repo rate at the 6 June meeting, taking the total cut to 75 basis points for this year. …

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