State-owned Bank of Baroda (BoB) has increased the interest rate on fixed deposits (FDs) for various maturities by up to 125 basis points, days after State Bank of India (SBI) hiked interest rates on some term deposits.
Interest rate on term deposits up to Rs 2 crore was hiked from 10 basis points to up to 125 basis points on various maturity buckets with effect from Dec. 29, 2023, BoB said in a statement.
The highest increase of 125 basis points has been effected in the 7-14 days bucket where interest rate has been increased from 3% to 4.25%, it said.
It is followed by a 15-45 days maturity period with a 100 basis point hike to 4.50%, it said.
The increase in rates are largely focused on shorter-term maturity buckets, specifically those less than 1 year, it said.
"Increasing interest rates in shorter-term maturities will not only greatly benefit depositors who keep deposits for shorter maturities but will also contribute to the Bank's objective of balancing and optimising the overall cost of deposits and protecting its Net Interest Margin (NIM)," it said.
This is also in line with the bank's strategy to increase its share of shorter-term retail term deposits, it added.
Earlier this week, SBI raised interest rates on some term deposits by up to 50 basis points. It is expected that other banks would follow the suit.
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