Kolkata: The deposit war among banks has turned intense even as the system liquidity eased this month with higher government spending leading to lower borrowing cost for market players.
State Bank of India has just unveiled a new 444-days deposit scheme to woo depositors with 7.25% interest, which has become its highest offer, 15 basis points more than the prevailing highest rate.
"In order to give boost to deposit mobilisation efforts in retail segment, it has been decided to introduce a new retail term deposit scheme for a specific tenor with added benefit in terms of rate of interest (sic)," the bank said in an internal circular Monday.
SBI's higher deposit rate offer came after it raised the benchmark marginal cost of fund based lending rate (MCLR) by 5 to 10 basis points from Monday. One basis point is a hundredth of a percentage point.
The Reserve Bank of India has been warning banks of the possible systemic risk as the credit growth has been outpacing deposit growth persistently over the years, leading to rise in banks' credit-deposit ratios.
While banks are chasing depositors aggressively, the pressure on system liquidity has eased in July with the higher government spending helping to lower overnight borrowing rates.
In July till last week, the banking system saw surplus liquidity with Rs 1.1 lakh on an average, the Reserve Bank of India data showed. The overnight weighted average call rate has averaged 6.39%, lower than the benchmark repo rate of 6.5%
State Bank of India has just unveiled a new 444-days deposit scheme to woo depositors with 7.25% interest, which has become its highest offer, 15 basis points more than the prevailing highest rate.
"In order to give boost to deposit mobilisation efforts in retail segment, it has been decided to introduce a new retail term deposit scheme for a specific tenor with added benefit in terms of rate of interest (sic)," the bank said in an internal circular Monday.
SBI's higher deposit rate offer came after it raised the benchmark marginal cost of fund based lending rate (MCLR) by 5 to 10 basis points from Monday. One basis point is a hundredth of a percentage point.
The Reserve Bank of India has been warning banks of the possible systemic risk as the credit growth has been outpacing deposit growth persistently over the years, leading to rise in banks' credit-deposit ratios.
While banks are chasing depositors aggressively, the pressure on system liquidity has eased in July with the higher government spending helping to lower overnight borrowing rates.
In July till last week, the banking system saw surplus liquidity with Rs 1.1 lakh on an average, the Reserve Bank of India data showed. The overnight weighted average call rate has averaged 6.39%, lower than the benchmark repo rate of 6.5%
