FD rates set to increase by September

By | June 10, 2010

The latest reports from Reserve Bank of India showed that there is a fall in total deposits with banks on a fortnightly basis. The total deposits of banks fell by Rs. 4,997.08 crore to Rs 45,26,220.20 crore as of May 21, 2010 as against Rs 45,31,217.28 crore reported on May 7, 2010.

But sources say that the fall is likely to end shortly.

Indraneel Sen Gupta, economist at BoA Merrill Lynch said, “We expect a bottoming out by September (and the figure could touch) to 18.2% by March 2011”.

Mridul Saggar, chief economist, Kotak Securities, said the current trend of rise in bank deposits is far below the acceptable levels. “If this continues, the full-year target of 18% won’t be reached,” Saggar said alluding to the estimates given by RBI in its monetary policy.

Saggar said, “Interest rates on deposits are too low now and in some time banks would have to consider their sources of funds and take a decision on deposit rates so that they are in a position to meet credit growth targets”.

O P Bhatt, Chairman of SBI said, there is an increasing bias about the deposit rates as banks require money to fulfill the credit demand.

S Govindan, general manager, Union Bank of India said, “We revised the rates on bulk deposits for 1 year in line with the certificate of deposit rates.  We are continuing with these rates for now and will take a call when markets start showing signs of liquidity crunch”.

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