Depositors in India have a reason to celebrate as major banks in the country have increased their fixed deposit interest rates. This news comes as a boon for savers who have always regarded bank deposits as a safer investment option than equity markets. Several banks have hiked their deposit rates in order to attract fresh depositors. The State Bank of India (SBI), Punjab National Bank (PNB), Kotak Mahindra Bank, Bandhan Bank, Axis Bank, and ICICI Bank have all increased their interest rates on fixed deposits.
| State Bank of India | Punjab National Bank | Kotak Mahindra Bank | Bandhan Bank | Axis Bank | ICICI Bank |
| 7.10% | 7.55% | 7.60% | 7% to 8.5% | 3.5% to 5% | 6.65% to 7.15% |
FD interest rates increased by major banks
The State Bank of India (SBI), the country’s largest public sector bank, has raised interest rates by 25 basis points on fixed deposits below rs 2 crore, effective February 15. In addition, the bank is offering a 400-day deposit scheme at a rate of 7.10 percent, with senior citizens receiving additional interest. Punjab National Bank (PNB) has raised interest rates on savings deposits by 0.25 percent and increased rates on fixed deposits below rs 2 crore by up to 0.50 bps. For domestic term deposits of one year, PNB is offering a rate of 7.55 percent. For deposits between 667 days to two years and two years to three years, PNB is offering 7.55 percent.
Kotak Mahindra Bank has increased the interest rates on fixed deposits by up to 25 basis points for the 15 months to two-year duration, effective February 10. The bank is now offering a rate of 7.60 percent per annum for senior citizens on deposit amounts of up to Rs 2 crore. Similarly, Bandhan Bank has raised the interest rates on fixed deposits by up to 50 basis points across different maturities, effective February 6. The bank is now offering 8.5 percent interest per annum for senior citizens and 8 percent for others for deposits with a tenure of 600 days. Similarly, for one-year deposits, the revised rate now stands at 7 percent.
Axis Bank, a private sector lender, has increased its interest rates on fixed deposits of less than Rs 2 crore, effective February 11, 2024. The bank is currently offering an interest rate of 3.50 percent on deposits that mature in the next seven to 45 days and 4 percent for deposits that mature in the following 46 to 60 days.
ICICI Bank, another private sector lender, announced a rise in interest rates on bulk fixed deposits of Rs 2 crore to less than Rs 5 crore, effective February 7, 2024. The bank now offers a guaranteed interest rate of 6.65 percent for fixed deposits maturing in 271 days to less than a year and 7.10 percent for deposits maturing in a year to 15 months. ICICI Bank also guarantees a maximum return of 7.15 percent on deposits with terms between 15 months and two years.
The increase in deposit rates can be attributed to banks scrambling for funds to meet the growing credit demand. As businesses and industries recover from the pandemic-induced slowdown, demand for loans is rising. With the current economic scenario in India, the central bank is unlikely to increase interest rates anytime soon, meaning that deposit rates may continue to rise in the near future.
Savers looking to take advantage of higher deposit rates should compare rates across banks and choose a savings account that offers the best returns. In addition to higher interest rates, savers should also consider other factors such as the minimum balance requirement, charges for non-maintenance of the minimum balance, and the bank’s reputation for customer service.
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