Who will offer best deposit interest rate? This will be new competition among banks - SBI vs HDFC Bank vs ICICI Bank

With bank credit growth outrunning deposit at higher margin, a new picture has emerged which is definitely a good news for savers but not something which a bank would want. Currently, the scenario is that, banking system’s credit growth has come at 12.9% outpacing deposit growth which recorded growth of 9.3% on yearly basis. This has intensified competition among banks. Because of this factor many banks are expected to hike their deposit interest rate, to lure customers especially in bulk deposits. For your information, for a bank deposits are liability and loans are assets. Hence, when a bank hikes deposit interest rate, that is to make their investment scheme much attractive than compared to others, so that such funds can be used again to lend borrowers. And the ideal situation is that, interest that they receive from loans are incomes for them, and the rates which they pay on deposits are expenditures for a bank. 

However, no bank likes to give hefty interest rate on deposits, but that is not the situation now. Banks are seen to be forced in order to provide more attractive deposit interest rate in order to give stiff competitions.

According to experts at India Rating, the incremental loan to deposit ratio of private banks at 100.5% and public sector banks (PSBs) at 119.5% over 3QFY18-3QFY19 also highlight a strong pick-up in credit growth. Ind-Ra has highlighted the intensification of competition for deposits.

Latest data suggest that, public sector banks (PSBs) have seen a credit growth of 8.4%, while deposit of 4.9% on yearly basis in Q3FY19. Such implies as per Ind-Ra, that PSBs could could also compete to recoup some of the deposit market share loss that they have conceded to private banks over the years.

Also, since RBI has removed five PSBs from prompt corrective action (PCA), Ind-Ra believes this could intensify competition for deposits, as some of the PSBs are likely to grow their balance sheets.

Thereby, Ind-Ra believes that if credit growth continues to outpace deposit growth, then scheduled commercial banks reliance on bulk deposits is likely to increase which could lead to a higher cost of funds along with increasing volatility in the asset-liability structure of banks. 

Thus, as a customer you can be ready to see a new intense competition among banks, which surely will make your investment richer and better. Therefore, let’s understand who offers best deposit interest rates. 

SBI! 

The highest interest rate for deposits below Rs 2 crore here is of 6.85% which is given on tenure 5 years and up to 10 years. A 6.80% interest rate each is enjoyed on deposits made for tenures like 1 year to less than 2 years, 2 year to less than 3 years and 3 years and upto 5 years. 

In case of short term deposits, a customer earns 6.40% interest rate on tenure 211 days to less than 1 year, while 6.35% rate is given on tenure 180 days to 210 days, 6.25% on tenure 46 days to 179 days and finally 5.75% rate is given on tenure 7 days to 45 days.

A senior citizen at SBI enjoys deposit interest rate between 6.25%  to maximum 7.35% annually. 

#FirstTrade की करें शुरुआत @AnilSinghviZEE और बिजनेस जगत की पहली #HiTechAnchor के साथ। https://t.co/hzuOp2J0mx

— Zee Business (@ZeeBusiness) March 12, 2019

HDFC Bank! 

Highest interest rate for deposits below Rs 2 crore at HDFC Bank, is 7.40%  given on tenures like 2 years 1day - 2 Years 15 days, 2 Years 16 days and 2 years 17 days - 3 Years. Meanwhile, 7.30% rate is enjoyed on tenures like 1 Year; 1 year 1 day - 1 year 3 days; 1 year 4 days; 1 year 5 days - 1 Year 15 Days ; 1 Year 16 days and 1 year 17 days - 2 Years

For longer tenure, customers enjoy deposit rate of 6.50% each on 5 Years 1 Day - 8 Years and 8 Years 1 Day - 10 Years period. 

The least interest rate on deposits is between 3.50% to 5.75%, which is given on tenures ranging from 7 days to 45 days. Also, 7.10% rate is earned on deposits made for 9 months tenure to less than a year. 

Senior citizens as usual enjoy more benefit here, as their interest rates on deposits below Rs 2 crore ranges from 4% to 7.90% annually.

ICICI Bank! 

At this bank, a customer enjoys 7.50% interest rate on tenure 2 years 1 day upto 3 years, while there is also interest rate of 7.25% each given on tenure like 3 years 1 day upto 5 years and 5 Years Tax saver FD(Max upto Rs. 1.50 lac).

Further, 7.10% and 7% interest rate is given on deposits made for tenure like 390 days to 2 years and 5 years 1 day upto 10 years.

For tenures like 185 days to 289 days, 290 days to less than 1 year and 1 year to 389 days has interest rate of 6.50%, 6.75% and 6.90% respectively. 

Here senior citizen enjoys interest rate on their deposits between 4.50% to massive 8%. 

From the above it can be seen that, HDFC Bank and ICICI Bank are offering much attractive interest rates on deposits than compared to SBI. Hence, a competition to manage the gap between credit and deposit, resulting in higher interest rate on savings can be a reality. It would be quite interesting to watch how much rates banks will offer on their deposits to customers.