HDFC Bank Ltd.

The country’s second-largest private sector lender, HDFC Bank, has increased fixed deposit (FD) rates across nine maturities by 25-150 basis points (bps)—the sharpest and widest increase by any bank so far. The rate hike comes three weeks after the third-quarter monetary policy review of the Reserve Bank of India (RBI), when the central bank increased the cash Reserve ratio by 75 bps.
 
In a scenario where rates are likely to go up for the system as a whole, HDFC has decided to align its rates with the market. The bank’s three FD slabs, with maturity between three and 10 years will now earn 7.5 per cent interest against the earlier 6 per cent. Interest rate for term deposits between two and three years has been raised by 100 bps to 7 per cent from 6 per cent rate. At the same time, the rate for FDs with a tenor of 366 days to two years has been increased by 50 bps to 6.5 per cent, except for the one year 16 days maturity offering 6.75 per cent rate.
 
The RBI move to hike the percentage of funds banks are required to hold as reserves with the central bank is expected to take out Rs 36,000 crore from the banking system. The increase in CRR comes in two tranches. The first hike of 50 bps to 5.5 per cent has become effective from February 13. While, the second increase of 25 bps will apply from the fortnight beginning February 27. Last week, IDBI Bank raised deposit rates by 0.25 per cent across various maturities and also introduced a new 500-day slab with offering a rate of 7 per cent.