Kotak Mahindra Bank announces a 200 basis-point hike in interest rates

Kotak Mahindra Bank announces a 200 basis-point hike in interest ratesPrivate sector bank, Kotak Mahindra Bank has announced a surprising 200 basis-point hike in its savings deposit rate for all deposits in excess of Rs 1 lakh in order to attract more deposits from its customers.

The bank will offer interest at the rate of 6 per cent for deposits above Rs 1 lakh and at 5.50 per cent for deposits below Rs 1 lakh. The revised rates will come on effect from November 01, 2011.

The managing director of Kotak Mahindra Bank, Mr Uday Kotak said that the increase in interest rates is to affect the total cost of funds of the bank by around 12 basis-points. The bank has also announced a 25 bps hike in lending rates.

The country’s central Bank, The Reserve Bank of India (RBI) has allowed banks to fix their own savings account interest rates and most banks are racing to increase interest rates in order to attract savings form the customers.

The deregulation of interest rates on savings deposits could trigger a battle to win customers among banks with relatively lower current account and savings account (CASA) deposits. The rates that banks offer on savings account deposits were earlier fixed at 4.0 per cent a year for all banks in the country.

Check out More news from Telecom Sector :: Pharmaceutical Sector :: Auto Sector :: Infrastructure :: Real Estate