ICICI raises rates, SBI may follow

Dec 05, 2010 |

New Delhi

Soon after ICICI Bank decided to raise deposit and lending rates by up to 50 basis points, the country’s largest lender State Bank of India (SBI) on Saturday said it too could raise deposit rates in the similar range.
The announcements came a day after RBI governor D. Subbarao asked banks to hike deposit rates and lower lending rates, with a view to raising the level of national savings, as well as to encourage investments needed for double-digit growth.
“Deposit rates could go up by 50 basis points or more,” SBI chairman O.P. Bhatt told reporters on the sidelines of the annual Bancon in Mumbai. On when would the rate hike be announced, he said, “next week”.
Stating that there has been a slight uptick in demand for credit, Mr Bhatt said, “If credit growth picks up, more deposits can be attracted into the banking system by better pricing which is beginning to happen...In the current situation, they (deposit rates) can only go up. “
However, contrary to RBI’s suggestion that banks should lower lending rates, ICICI has decided to increase benchmark prime-lending rate and its Floating Reference Rate (FRR) for consumer loans (including home loans) by 50 basis points.

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