Within a week of the Reserve Bank of India (RBI) hiking its key rates, private-sector lender Kotak Mahindra Bank (KBM) on Tuesday increased interest rates on its term deposits by 0.25 per cent.
The hike in the rate is applicable to deposits having maturity of over a year and is with immediate effect, the bank said in a release.
In order to check inflationary concerns, the RBI had on September 16 raised its short-term lending rate (the repo rate) by 0.25 per cent, to 6 per cent, and borrowing rate (reverse repo) by 0.50 per cent, to 5 per cent.
After the increase, bankers had opined there will be an increase in deposit rates in the near-term, which will in turn create pressure to increase lending rates as well.
KMB is the first lender to upwardly revise its deposit rates, since the RBI's mid-quarter review last week.
Under the revised rate structure, deposits having a maturity of over one year but till 389 days will fetch an interest of 7.25 per cent per annum, while those between five years and ten years attract an interest of 7.75 per cent, the release said.
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