Business Standard

Deposit rates raised by public sector banks higher than private peers

The share of bank loans bearing over 8 per cent interest rates increased from 47.2 per cent in March 2022 to 78.9 per cent in March 2023, and further to 83.7 per cent in December 2023

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Manojit Saha

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The pass-through to weighted average lending rates (WALRs) on fresh rupee loans between May 2022 and January 2024 was higher for public sector banks (PSBs) compared to private banks (PVBs). The transmission to WALRs on outstanding rupee loans was higher for private banks. In case of term deposits, PSBs have increased their deposit rates relatively more than private banks.

The share of bank loans bearing over 8 per cent interest rates increased from 47.2 per cent in March 2022 to 78.9 per cent in March 2023, and further to 83.7 per cent in December 2023.

The higher interest rate differential for senior citizens and the special deposit schemes for senior citizens has propelled a tectonic shift in deposits accretion for citizens, according to a report by State Bank of India. According to SBI’s estimates, there are around 41 million senior citizens term deposit accounts in the country with a total deposit of Rs 14 trillion in 2018.

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First Published: Apr 16 2024 | 12:10 AM IST

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