India’s largest public sector lender, State Bank of India, on 27 March 2012, increased interest rates on retail term deposits with maturity periods of less than one year by 25-100 basis points. The bank made the announcement about the hike in a notice to the Bombay Stock Exchange.
The interest rate on deposits with maturity periods ranging between seven days and less than one year was increased to a uniform 8 per cent.
Banks, which are facing shortage of liquidity, are also increasing their short-term deposit rates. Banks on 27 March 2012, borrowed a total of 1.78 lakh crore rupees from the Reserve Bank of India through the repo auction. On 26 March 2012, the borrowing had touched a record high of 1.95 lakh crore rupees.
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