ICICI Bk hikes Interest rate for long term deposits following HDFC & IDBI

ICICI Bank has hiked interest rates on long-term deposits by 25-50 basis points. The move comes a day before Rs 12,000 crore gets
withdrawn from the banking system as the second phase of RBI’s increase in cash reserve ratio comes into effect.

ICICI is the second lender after HDFC Bank which has increased its interest rates in the past one week. ICICI Bank, however, has hiked rates only for two of its slabs unlike HDFC Bank which had hiked interest rates across different slabs for periods above one year. The cash reserve ratio is the portion of deposits that banks are required to park with RBI as a part of prudential measures.

With effect from Thursday, ICICI Bank will offer 6.75% on 390-day deposits against 6.5% earlier. The bank has also increased the return on its 590-day deposits by 50 basis points from 6.25% to 6.75%. The bank had in January 8 increased interest rates in for one of its slabs — deposits for 270 days to one year by 25 bps to 5.75% for large deposits above Rs 15 lakh and up to Rs 1 crore. It had also increased rates selectively in October.

HDFC Bank had last week increased its deposit rates for tenures above one year from 25 bps to 150 bps (1.5%). It increased the interest rate on the one year-one day to one year-15 day slab from 6% to 6.5%, on the one year-16 days from 6.5% to 6.75%, on one year-17 days to two years from 6% to 6.5%, two years-one day to two year-15 days from 6% to 7%, two year-16 days from 7% to 7.25%, two year-17 days to three years from 6% to 7%. It also increased interest rates on three year-one day to five years, five year-one day to eight years and eight year one day to 10 years from 6% to 7.5%.

Early this month, IDBI had also hiked its deposit rates RBI had late last month announced a two-stage hike in cash reserve ratio by 75 bps to 5.75%.