SBI, PNB increase FD interest rates: State Bank of India (SBI) and Punjab National Bank (PNB) have increased their fixed deposit (FD) interest rates. The development comes close on the heels of the RBI ramping up efforts to control excess liquidity from the banking system.
According to the SBI's website, the bank has increased interest rates by up to 20 basis points (bps) on FDs below Rs 2 crore on certain tenors for the general public and senior citizens. The revised interest rates on FDs are applicable from June 14.
For SBI FDs with a term of 211 days to less than a year, the public sector bank has increased the interest rate by 20 bps to 4.60%. For senior citizens, the rate has been hiked to 5.10%.
For FDs with a tenor of 1 year to less than 2 years, the interest rate has gone up by 20 bps from 5.10% to 5.30%. FDs with the same tenor made in the name of senior citizens will attract a 5.80% return.
SBI, which is the country's largest lender, is offering a hike of 15 bps from 5.20% to 5.30% on FDs with a tenor from 2 years to 3 years. For senior citizens, the new rate would be 5.85%.
There has been no change in the SBI's FD rates for tenors of 3 years to 5 years and 5 years to 10 years.
Similarly, PNB, the country's second-largest public-sector lender, has increased interest rates on FDs of less than Rs 2 crore.
Interest rates for FDs lasting one year and more than a year and up to 2 years, the interest rate has been hiked to 5.20% from 5.10%.
The bank has hiked interest rates for FDs with tenors of more than 2 years to up to 3 years to 5.30 per cent. Deposits lasting more than 3 years to 5 years will attract a 5.50% return. The bank will pay a 5.60% return on FDs with a tenor of 5 to 10 years.
The public lender has also increased the interest rates on FDs exclusively for senior citizens.
Sandeep Bagla, CEO, TRUST Mutual Fund, said that when the RBI takes measures to reduce liquidity from the system, banks compete harder by raising deposit rates. It is therefore natural that the interest rates on FDs will go up. "Liquid mutual funds can be another option where investors can get good returns with almost nil risk."