HDFC Bank hikes interest on FDs; loans could get costlier

New Delhi, Apr 26: In what could be an indication that lending interest rates could soon be on upward cycle, HDFC Bank has increased interest rates on term deposits by up to 100 basis points.
The bank has also hiked interest rates on fixed deposits (FDs) under Rs 1 crore. The new rates are effective from April 24, according to the bank’s website.
“We are glad to inform you that the Fixed Deposit interest rate for deposits of more than or equal to Rs 1 crore has been increased to 7.25% from 7.10% earlier, for a tenure of 1 year 5 days to 3 years. This is effective from April25-April 27, 2018.” the bank told customers in an email. “What’s more? Senior citizens get additional 0.5% interest rate for deposit less than Rs 5 Crore.”
HDFC Bank’s move comes after the State Bank of India (SBI) hiked rates of bulk deposits by up to 50 basis points recently.
The minutes of the Reserve Bank of India’s last monetary policy committee meeting suggested that the central bank may be moving towards hiking its benchmark repo rate. Banks typically pre-empt this by hiking deposit rates first, and then increasing lending rates as their marginal cost of funding goes up.
At present, HDFC Bank has a deposit base of 7.9 lakh crore and enjoys a market share of 7 percent of the country’s bank deposits.
According to RBI data, bank deposits as of March 30, 2018 were at Rs 115 lakh crore, which witnessed a 6.7 percent rise over FY2017.