SBI deposits fetch more http://www.telegraphindia.com/1120328/jsp/business/story_15303906.jsp#.T3MeL2ES3ko

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Mumbai, March 27: The State Bank of India today raised its deposit rates on select maturities by 25 to 100 basis points, which was seen as an indication of the tight liquidity situation in the financial system. Borrowers also had something to cheer about. Existing home loan customers of the country's largest commercial bank will be allowed to re-price their loans at lower rates. Customers of the SBI who have existing home loans linked to the prime lending rate (now at 14.75 per cent) will now be able to switch over to loans benchmarked against the base rate. At present, the floating rate of the bank is linked to the base rate, which is pegged at 10 per cent. The SBI's current floating rates on housing loans vary from 10.5 per cent, for up to a Rs 30-lakh loan, to 10.75 per cent, for loans between Rs 30 lakh and Rs 75 lakh, and go up to 11 per cent for loans above Rs 75 lakh. Customers looking to switch will have to pay a fee of 1 per cent of the outstanding loan amount. The country's largest bank today said it would offer 25 basis points more on deposits in the maturity bucket of 241 days to less than one year and 100 basis points for deposits with tenors of 181 to 240 days and seven to 90 days each. Further, deposits for 91 to 179 days will earn 75 basis points more. At present, the bank offers an interest rate ranging between 7 and 7.75 per cent on these deposits of up to Rs 1 crore. However, it also provides an additional premium of up to 200 basis points over the card rates on single-term deposits of Rs 15 lakh and above, but below Rs 1 crore. The SBI is not the only lender to have raised deposit rates over the past few days. Reflecting the year-end demand for funds amid tight liquidity conditions, the Bank of Baroda has raised deposit rates by 25 basis points. The nationalised bank is offering an interest rate of 5 per cent on 15 to 45 days and 46 to 90 days fixed deposits and 15 basis points more on 181 to 270 days term deposits to 7.75 per cent. The Bank of India has also raised interest on 3-to-5 year term deposits by 75 basis points to 9.25 per cent. The interest rate on deposits above five years was raised by half a percentage point to 9.25 per cent. ING Vysya Bank is offering a higher rate of 10 per cent (for 366 days) from the earlier rate of 9.75 per cent, to promote its Active Deposit scheme. Liquidity in the banking system has become tight on account of the advance tax outflows on March 15 coupled with intervention by the central bank in the forex market. When the RBI sells dollars in the forex markets, it simultaneously buys rupees, thereby impacting the liquidity in the system. Banks borrowed a record Rs 1.96 lakh crore from the Reserve Bank of India's repo window on Monday, up from over Rs 1.80 lakh crore last Thursday. This demand for funds comes despite the central bank bringing down the cash reserve ratio (CRR) by 125 basis points in two instalments. The last cut was on March 9 when a 75-basis-point reduction released Rs 48,000 crore into the banking system. The CRR is that portion of bank deposits that must be maintained with the RBI.