As the new year unfolds, India’s largest banks are stepping up to offer better returns for depositors. The State Bank of India (SBI) and HDFC Bank have both announced changes to their deposit schemes, aiming to attract more customers and enhance savings options. These adjustments come at a time when the banking sector is witnessing a steady growth in deposits and credit. This article explores the recent changes in deposit rates and the implications for customers.

SBI’s Innovative Offerings for Senior Citizens

The State Bank of India has introduced a new category of deposit rates specifically for super senior citizens, those aged 80 and above. This group will receive an additional 10 basis points over the standard senior citizen rates. This initiative is part of SBI’s broader strategy to innovate its deposit offerings and capture a larger market share.

SBI has also launched a unique recurring deposit scheme called “Har Ghar Lakhpati.” This scheme allows customers to set specific savings goals, such as accumulating Rs 1 lakh. It simplifies the process of saving and encourages financial planning among customers, including minors. By targeting younger savers, SBI aims to instill a habit of saving early in life.

SBI Chairman C S Setty emphasized the bank’s commitment to creating goal-oriented deposit products. He stated, “We aim to create goal-oriented deposit products that not only enhance financial returns but also align with our customers’ aspirations.” This approach reflects a shift in traditional banking, making it more inclusive and impactful for a diverse clientele.

HDFC Bank Adjusts Bulk Deposit Rates

HDFC Bank has also made headlines by revising its rates on bulk deposits, specifically for amounts of Rs 5 crore and above. The bank has increased rates by 5 to 10 basis points across various tenors. This adjustment is seen as a move to align with the competitive landscape of deposit rates in the banking sector.

Currently, HDFC Bank offers a rate of 7.25% for non-seniors on its 55-month deposits. For deposits with tenures ranging from one to five years, the rates vary between 6.6% and 7%. These changes are significant as they reflect the bank’s strategy to remain competitive and attract high-value depositors.

The revision in rates by major banks like HDFC often leads to similar adjustments by other lenders. However, sources indicate that HDFC Bank’s changes are primarily aimed at catching up with its competitors rather than leading the market. As deposit rates rise, borrowing costs may also increase, impacting the overall lending landscape.

The Impact of Rate Changes on the Banking Sector

The recent adjustments in deposit rates by SBI and HDFC Bank come at a crucial time when there is a growing demand for a rate cut by the Reserve Bank of India (RBI). The RBI’s data indicates that bank deposits and credit are growing at a steady pace of 11.5% as of mid-December. This growth reflects a healthy banking environment, but it also raises questions about the sustainability of higher deposit rates.

When major banks increase their deposit rates, it often leads to a ripple effect throughout the banking sector. Other banks typically follow suit to remain competitive. This can result in higher borrowing costs for consumers, as the marginal cost of lending rates is directly linked to deposit costs. Bank of Baroda, for instance, reported a growth of 11.7% in global advances and 11.8% in global deposits for the quarter ending December 2024. Such figures highlight the overall health of the banking sector and the importance of strategic rate adjustments to maintain growth and customer satisfaction.

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