Pushed to a corner by the liquidity tightening measures by the Reserve Bank recently to salvage the rupee, which lost close to 12 per cent this fiscal so far, leading private lenders which are facing tight liquidity such as HDFC Bank and Axis Bank have raised fixed deposit rates by up to 4 percent, a move which may be followed by others.

 

The second largest private sector lender HDFC Bank has raised fixed deposit rates by 1 percent for maturities between 15 days to 6 months one day effective July 27. The bank has increased the interest rate by 0.75 percent for maturity buckets less than 1 year but over 6 months one day.Axis Bank has raised interest rate on term deposits with maturity between 14-29 days by 4 percent to 8 percent, while in case of 7-14 days the increase is by 3.5 percent to 7.5 percent on bulk deposits above Rs 1 crore, effective today.

 

 At the same time, the bank raised interest rate by 0.5 to 2.25 per cent across the various maturities less than one year but over 29 days.Yesterday, small private sector Yes Bank had raised lending and deposit rates by up to 0.5 per cent.The bank revised upwards its base rate, or minimum lending rate, by 0.25 percent 10.75 percent. The bank also revised its fixed deposit rates by 0.25 per cent to 0.5 per cent in select tenors.

 

 To contain rupee depreciation, RBI has taken slew of measures in the past couple of weeks resulting in the tight liquidity situation for the banks.The decline of the rupee to a record low of 61.21 against the dollar on July 8 forced the RBI to take a series of unconventional measures to curtail liquidity and curb speculation.