HDFC Bank has hiked the interest rates on term deposits by up to 100 basis points (1 percentage point), in order to grow its deposits. This means that the lending interest rates will also be revised upwards.
Further, the bank has also hiked interest rates on fixed deposits (FDs) under Rs 1 crore. These new rates are effective from April 24th, 2018. HDFC Bank has a market share of 7 per cent of the country’s bank deposits.
HDFC has taken this step after the State Bank of India (SBI) had hiked the rates of bulk deposits by up to 50 basis points in January 2018. Other banks are also expected to follow the steps and hike their deposit rates. This step is taken, as the deposit growth is not keeping pace with the expansion rate in credit.
As per Reserve Bank of India, bank deposits as of March 30, 2018 stands at Rs 115 lakh crore, which is 6.7 percent growth over FY2017. Against this, the bank advances have grown 10.3 per cent to Rs 87 lakh crore, which is higher than 8.2 per cent in the FY 17.
Current HDFC Bank Interest Rates on FD
After the rates will get effective, HDFC Bank will be offering a flat interest rate of 7 per cent on all maturities of over one year. As Senior citizens get additional 0.5% interest rate for deposit less than Rs 5 Crore, therefore senior citizens can get interest rate up to 7.5 per cent and bulk depositors (Rs 1 crore and above) get even more.
Effect of Rate Hike
The step taken by HDFC Bank to hike the interest rate reflects the tighter liquidity conditions in the market and also reflects the upward trajectory in the benchmark government bond yield from the last few days. The 10-year benchmark bond has risen 60 bps to end at 7.73 percent on Wednesday from its low of 7.13 percent after the RBI’s monetary policy review on April 5th. In addition, 10-year benchmark bond also rose after minutes from the monetary policy committee revealed that they are more concerned about inflation than what the governor conveyed in the policy.
Leading Bank’s FD Interest Rates for 1 Year 2018 (<INR 1 Cr.)
| Bank Name | Regular FD Rates (per annum) | Senior Citizen FD Rates (per annum) |
| ICICI Bank | 7.5% | 8.0% |
| HDFC Bank | 6.85% | 7.35% |
| SBI | 6.4% | 6.9% |
| Bank of Baroda | 6.6% | 7.1% |
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