Because of the tight liquidity condition, two leading private sector banks -HDFC Bank and Axis Bank -have raised fixed deposit rates by up to 4 percent which may be followed by others in near future..
Country's second largest private sector lender, HDFC Bank, has raised fixed deposit rates by 1% for maturities between 15 days to 6 months.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 from today.Yesterday, private sector Yes Bank had raised lending and deposit rates by up to 0.5%.In order 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.On July 15, the Reserve Bank put in place measures to restore stability in the foreign exchange market, including raising the Marginal Standing Facility and bank rates to 10.25 %.The central bank also conducted open market sales of government securities of Rs 2,500 crore on July 18.On July 22, the RBI rationalised import of gold by making it incumbent on all nominated banks to ensure that at least one-fifth of the imported metal is exclusively made available for the purpose of exports. A day later, the RBI directed banks to draw only 50 per cent of their total deposits in overnight borrowings and maintain a 99 % average cash reserve ratio everyday.
The decline of 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.
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